The U.S. Federal Reserve is expected to deliver another interest rate cut in December, extending its effort to stabilize a slowing economy under the strain of a weakened labor market and a historic government shutdown that has clouded official data. According to a Reuters poll of 105 economists, 80% forecast a 25-basis-point reduction at the Fed\u2019s December 10 meeting \u2014 a third consecutive cut that would bring the benchmark rate to a range of 3.50%\u20133.75%.<\/p>\n\n\n\n
The expectation signals a growing consensus among economists even as disagreement lingers inside the Federal Open Market Committee (FOMC). Fed Chair Jerome Powell has cautioned that further easing is not guaranteed, citing the need for clearer labor and inflation signals before year-end. But for most analysts, the data \u2014 limited though it is \u2014 points toward a central bank leaning on the side of insurance rather than restraint.<\/p>\n\n\n\n
\u201cThe labor market still looks relatively weak,\u201d said Abigail Watt, U.S. economist at UBS. \u201cThat\u2019s one of the key reasons why we think the FOMC will continue to deliver that December cut. The risk will be if the incoming data dispels that sense of weakness.\u201d<\/p>\n\n\n\n
The government\u2019s shutdown, now the longest in U.S. history, has deprived policymakers of key metrics, including the official nonfarm payroll and inflation updates. Temporary funding legislation passed by the Senate on Monday could reopen agencies in time to restore those reports, but economists say the damage to confidence and operations may linger into the winter.<\/p>\n\n\n\n
Even before the shutdown, signals of economic fatigue were mounting. The latest private-sector data from ADP indicated U.S. employers shed an average of 11,250 jobs a week through late October \u2014 a sign of cooling momentum after years of expansion. The unemployment rate, last recorded at 4.3%, is projected to edge up to 4.5% next year, while GDP growth is expected to slow sharply from 3.8% in the second quarter to just 1.0% this quarter.<\/p>\n\n\n\n
\u201cThe labor market is cooling, yes, but it\u2019s not collapsing,\u201d said Stephen Juneau, U.S. economist at Bank of America Securities. \u201cWe\u2019re seeing less hiring, but not an avalanche of firing either. December may not be a done deal unless Powell sees more evidence that downside risks are truly materializing.\u201d<\/p>\n\n\n\n
The Fed\u2019s balancing act remains delicate. Inflation, measured by the Personal Consumption Expenditures (PCE) index \u2014 the central bank\u2019s preferred gauge \u2014 has stayed above the 2% target for over four years, the longest stretch since the mid-1990s. That persistence has raised questions about credibility. \u201cIt could impact Fed credibility that we\u2019ve had inflation above target for a long period of time,\u201d said Josh Hirt, senior economist at Vanguard. \u201cPeople ignore it until one day they don\u2019t \u2014 that\u2019s the danger.\u201d<\/p>\n\n\n\n
Powell\u2019s team faces an increasingly complex dual mandate: taming prices without triggering deeper job losses. Some policymakers argue inflationary pressures, driven in part by tariffs and supply disruptions, require caution before cutting again. Others warn that the real risk is an accelerating slowdown in hiring and investment. \u201cThe tension between those two priorities is only going to grow next year,\u201d said Watt.<\/p>\n\n\n\n
Market traders appear convinced the easing cycle will continue. CME Group\u2019s FedWatch tool shows a 65% probability of a quarter-point rate cut in December and pricing for another move early next year. Nearly half of the economists surveyed expect the rate to fall further to 3.25%\u20133.50% by spring 2026.<\/p>\n\n\n\n
At the same time, Wall Street\u2019s optimism has remained surprisingly resilient. The Dow Jones Industrial Average hit a record this week as investors interpreted the Fed\u2019s gradual shift as a sign of measured stability rather than panic. But the longer-term outlook is more uncertain. Growth is expected to average just 1.8% annually through 2027 \u2014 what the Fed considers the non-inflationary pace of expansion.<\/p>\n\n\n\n
\u201cThe challenge now,\u201d said Juneau, \u201cis that monetary policy alone can\u2019t repair structural damage from political gridlock or global instability. Rate cuts can buy time, but they can\u2019t buy certainty.\u201d<\/p>\n\n\n\n
As December approaches, Powell\u2019s words will be weighed as heavily as his actions. The Fed\u2019s credibility \u2014 and perhaps its control of the narrative \u2014 depends on its ability to reassure markets that its strategy remains grounded in data, not politics. In an economy losing steam and faith, reassurance may soon prove its most valuable currency.<\/p>","protected":false},"excerpt":{"rendered":"
The U.S. Federal Reserve is expected to deliver another interest rate cut in December, extending its effort to stabilize a slowing economy under the strain of a weakened labor market and a historic government shutdown that has clouded official data. According to a Reuters poll of 105 economists, 80% forecast a 25-basis-point reduction at the […]<\/p>\n","protected":false},"author":1,"featured_media":1160,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_gspb_post_css":"","footnotes":""},"categories":[3,40,54,70],"tags":[],"class_list":["post-1069","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-federal-reserve","category-markets","category-u-s-economy"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/posts\/1069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/comments?post=1069"}],"version-history":[{"count":0,"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/posts\/1069\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/media\/1160"}],"wp:attachment":[{"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/media?parent=1069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/categories?post=1069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/magazinenews.net\/ro\/wp-json\/wp\/v2\/tags?post=1069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}