{"id":620126,"date":"2025-12-08T13:32:21","date_gmt":"2025-12-08T13:32:21","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/620126\/"},"modified":"2025-12-08T13:32:21","modified_gmt":"2025-12-08T13:32:21","slug":"divided-fed-ponders-us-interest-rate-cut-at-end-of-tumultuous-year-federal-reserve","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/620126\/","title":{"rendered":"Divided Fed ponders US interest-rate cut at end of tumultuous year | Federal Reserve"},"content":{"rendered":"

A divided Federal Reserve<\/a> meets this week to decide whether to cut interest rates, the US central bank\u2019s last meeting at the end of a tumultuous year.<\/p>\n

The US central bank faces a number of unique challenges as it weighs its latest interest-rate decision.<\/p>\n

After the six-week government shutdown briefly shuttered the Bureau of Labor Statistics, the federal agency that collects economic data on prices and employment, Fed officials have less data to make their decision.<\/p>\n

Making matters more complicated is what appears to be growing internal division among the committee\u2019s voting members, who are split on whether there should be a third rate cut before the end of the year. Rates currently sit at a range of 3.75% to 4%.<\/p>\n

Although the committee started cutting the decades-high interest rates last fall, a majority consensus held off on cuts in the first half of the year, citing economic uncertainty from tariffs. The committee has since cut rates by a half-point after its September and October meetings, with a growing number of committee officials signaling there should be a third cut this year. Markets are expecting a final rate cut on Wednesday, but it\u2019s unclear whether enough officials will agree on the move.<\/p>\n

The Fed has a dual mandate to stabilize prices and the labor market. Raising interest rates can steady prices: the Fed pushed rates up quickly when inflation hit 9.1% in 2022. But if the central bank isn\u2019t careful, high interest rates can push up unemployment. The risk means setting interest rates is a delicate balancing act that has huge repercussions on the economy.<\/p>\n

In recent months, Fed chair Jerome Powell has said officials are observing pressure from both sides of the Fed\u2019s mandate. Both prices and unemployment are going up: inflation<\/a> went from 2.3% in April to 3% in September while the unemployment rate<\/a> increased from 4% in January to 4.4% in September.<\/p>\n

When explaining the Fed\u2019s most recent rate cut in October, Powell said<\/a> that a majority of officials are more concerned about the labor market over inflation, but \u201cwe have one tool\u201d.<\/p>\n

\u201cWe can\u2019t do both of those at once. People have different forecasts \u2026 and they have different levels of risk aversion,\u201d Powell said, noting that much of the division in October was over how officials seemed to be thinking about a December rate cut.<\/p>\n

Because of the government shutdown, the collection of October\u2019s data was cancelled, and November\u2019s price and labor market data will be released later in December. While it\u2019s unclear whether more data would have built a stronger consensus, it would have given officials a clearer picture of the economy during a turbulent period.<\/p>\n

In October, Powell said the lack of data meant officials would need to proceed with caution in their December meeting.<\/p>\n

\u201cWhat do you do if you\u2019re driving in the fog? You slow down,\u201d he said.<\/p>\n

Amid the internal debates on the upcoming Fed meeting, multiple reports have said Donald Trump is zeroing in<\/a> on Kevin Hassett, a close ally to the president and his current director of the National Economic Council, as the potential next chair of the Fed. Powell, who was appointed by Trump in 2018 and was reappointed by Biden again in 2022, is facing the end of his term in May.<\/p>\n

Hassett has been one of the president\u2019s staunch economic advocates over the past year, insisting that prices have been stable and that the White House\u2019s tariffs have strengthened the economy. He has also been a vocal proponent of more rate cuts, which Trump believes will boost the economy without raising prices.<\/p>\n

This will be the eighth meeting of the Federal Open Market Committee (FOMC), which has 12 members who vote on rate changes. The committee will announce its decision on Wednesday afternoon.<\/p>\n","protected":false},"excerpt":{"rendered":"A divided Federal Reserve meets this week to decide whether to cut interest rates, the US central bank\u2019s…\n","protected":false},"author":2,"featured_media":620127,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[51,16,15],"class_list":{"0":"post-620126","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-uk","10":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115684202577003021","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/620126","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=620126"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/620126\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/620127"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=620126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=620126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=620126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}