Fed's December Interest Rate Decision: Divisions Deepen

Expectations for Rate Cuts Ahead of Fed Meeting

The Federal Reserve (Fed) is preparing for its final monetary policy meeting of the year, scheduled for December 9-10, with limited data. However, the disagreements among officials are affecting expectations for a 25 basis point rate cut.

Rate Decision Expected After October Meeting

In its October meeting, the Fed made an important decision regarding the course of its policy interest rate by implementing a 25 basis point rate cut. This decision was made by a presidential vote, and the cut was accepted by 10 votes to 2.

Radical Differences Among Members

Stephen Miran, a board member, is calling for a 50 basis point cut, while Kansas City Fed President Jeffrey Schmid argues that rates should be kept steady. This conflict between the hawkish and dovish factions is deepening, as some members cite price stability while others point to the weakening labor market.

Uncertainty and Market Reactions

Market analysts indicate that these disagreements are creating uncertainty in the outlook for monetary policy and express that the likelihood of reaching a consensus in the Fed's decision-making process is low. Jerome Powell stated after the October meeting that a rate cut in December is not guaranteed. However, recent statements from New York Fed President John Williams and other members in favor of cuts have strengthened market expectations for a 25 basis point cut.