Federal Reserve's Year-End Showdown: "Hawkish Rate Cut" Virtually a Done Deal
BlockBeats News, December 10: At 3 a.m. Beijing time tonight, the Federal Reserve will announce its final interest rate decision of the year, revealing its difficult choice amid a data "air pocket" and internal divisions. The expected rate cut this time may be accompanied by a vague description of the interest rate path for next year, potentially leaning towards a hawkish stance.
In addition to the expected rate cut, investors currently expect the Fed to implement two more 25-basis-point rate cuts by the end of 2026, keeping the benchmark rate in the 3.00%-3.25% range. Michael Feroli, Chief U.S. Economist at JPMorgan, said that the emergence of hawkish views among regional Fed presidents could keep the 2026 rate outlook consistent with September's—despite already low expectations for this week's rate cut and a higher threshold for further cuts.
Feroli said that the new rate forecast will "reflect unease about rate cuts," and the policy statement may adjust its wording, "implying a reduced likelihood of rate cuts in subsequent meetings," with Powell emphasizing in the post-meeting press conference that further rate cuts would only occur "in the event of a significant deterioration in the labor market."
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