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Fed Faces December Crossroads: Balancing Employment and Inflation Amid Uncertain Data

Fed Faces December Crossroads: Balancing Employment and Inflation Amid Uncertain Data

Bitget-RWA2025/11/14 22:44
By:Bitget-RWA

- U.S. Fed's December rate cut probability dropped below 50% as inflation, labor data delays, and policy uncertainty complicate decisions. - Powell emphasized FOMC divisions between easing rates for jobs vs. maintaining rates to control inflation, exacerbated by government shutdown delays. - Goldman Sachs forecasts three 2025-2026 cuts to 3-3.25%, contrasting with market's 67% December cut chance and Powell's cautious stance. - December meeting could shape 2026 markets: a pause risks labor strains, while a

Prediction markets and financial indicators now show that the likelihood of the U.S. Federal Reserve lowering interest rates at the December FOMC meeting has dipped below 50%. This drop comes as the central bank faces ongoing uncertainty regarding inflation, labor market trends, and delayed economic reports, all of which complicate its policy decisions. As of November 11,

, while 30% anticipated no change, and only 2% foresaw a more significant 50-basis-point reduction. At the same time, suggested a 63.6% chance of a 25-basis-point cut and a 36.4% probability that rates would remain in the 3.75-4% range.

Fed Faces December Crossroads: Balancing Employment and Inflation Amid Uncertain Data image 0
Fed Chair Jerome Powell has . During his press conference after the meeting, Powell noted that the Federal Open Market Committee (FOMC) remains split between those favoring rate cuts to aid the labor market and those wanting to keep rates elevated to fight inflation. This internal disagreement has been intensified by the recent U.S. government shutdown, which postponed the release of essential economic data, including labor and inflation figures for October and November. , crucial data might still arrive too late to influence the Fed’s decision.

These shifting market expectations highlight broader concerns about the economy.

, projecting three rate cuts between December 2025 and June 2026, with the final rate settling at 3-3.25% by mid-2026. The firm’s analysts believe that lower rates would increase liquidity, which could benefit riskier assets such as cryptocurrencies. This view is consistent with recent patterns, as crypto markets have experienced volatility amid mixed signals from central banks. , for example, underscored how sensitive the sector is to expectations about interest rates.

Investor opinions are also divided. The Seeking Alpha Sentiment Survey found that subscribers were evenly split on whether there would be further rate cuts in 2025, which contrasts with Powell’s more cautious stance.

, now seems to match the current 67% chance of a December cut shown by CME FedWatch—a notable decrease from the 90% probability seen in October. This change highlights the difficulty of making predictions in a climate dominated by data delays and policy uncertainty.

The outcome of the December meeting will be crucial for setting the tone for markets in 2026. Should the Fed choose to hold rates steady, it may signal a longer period of tight policy, reinforcing its commitment to controlling inflation but potentially putting pressure on the labor market. On the other hand, a 25-basis-point cut would indicate a shift toward supporting economic growth and could trigger a broader market rally. With the government shutdown close to ending, the economic data released in the coming weeks will play a key role in shaping the Fed’s next moves.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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