The Federal Reserve announces the interest rate decision today… and Powell’s word is under the microscope
Federal Reserve officials will hold their last meeting for 2025 today, Wednesday, December 10, with the expected announcement of interest rates, and an explanation of the dimensions of the monetary policy that the central bank will pursue during the coming period.
What does the Fed’s announcement include?
The last meeting of the year comes, in the midst of a year marked by economic turmoil, including the recent US government shutdown that delayed the release of key data such as inflation and jobs numbers for October.
The Federal Reserve’s agenda, today, includes, Up-to-date policy statement and economic forecasts including "Points chart" For future interest rates, this is followed by the most important event, which is the press conference of the Chairman of the Federal Reserve, The US Central Bank on interest rates. Beth Hammack, Governor of the Federal Reserve in Cleveland, confirms that "It is not clear that monetary policy should do more". Lori Logan from Dallas and Jeffrey Schmid from Kansas City agree with her in calling for caution and monitoring inflation developments.
On the other hand, Governor Stephen Meiran comes out in defense of the necessity of cutting interest rates again, expressing his conviction that prices are still very high.
What are the markets waiting for?
Markets widely expect that the Federal Reserve will cut the interest rate for the third time in a row by 25 basis points (0.25%), which will lead to Cutting the federal funds rate to a range of 3.00%-3.25% from the current range of 3.25%-3.50% after two previous cuts in September and October.
This would reflect the Fed prioritizing low labor market unemployment, which has risen to 4.2%, and layoffs at 1.17 million through November – the highest level since 2020.
What about the period ahead?
The forecast indicates To only two additional cuts next year 2026, according to the average forecast (3.00% – 3.25% by the end of the year), which makes prolonged monetary easing unlikely.
Powell’s press conference will be crucial to uncover any hints about suspending monetary easing in 2026, or about a possible successor to Powell as president. "Federal" When his term expires in May 2026.
In general, you expect Marketsadjustments on this path, but the basic scenario is a deliberate reduction to achieve a balance between jobs and prices.
The research center expects "Goldman Sachs" Policymakers will slow the pace of monetary easing in the first half of next year as economic growth accelerates and inflation slows.
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