The US Federal Reserve began its eighth and final meeting of the year on Tuesday, Dec. 9, following two consecutive rate cuts in September and October. This time, however, policymakers are sharply divided over the central bank’s next move.
A long-awaited shift
After keeping rates unchanged for five straight meetings earlier this year—despite mounting pressure from President Donald Trump and his administration—the Fed delivered a cumulative 50 bps in cuts over the last two meetings.
What matters to investors now?
While markets are heavily pricing in another 25 basis-point cut at today’s meeting, investors are almost entirely focused on the underlying rationale and the tone of Chair Jerome Powell’s remarks, rather than the rate decision itself.
Close attention will also be paid to the Fed’s quarterly Summary of Economic Projections.
A return to the easing path
At its September meeting, the Fed cut rates by 25 bps, but the bigger catalyst for markets was the Open Market Committee’s projection of two additional cuts this year—October and December. With those projections nearly realized, attention now turns to how the Fed assesses the critical months ahead and the trajectory it envisions for monetary policy.
The US Federal Reserve began its eighth and final meeting of the year on Tuesday, Dec. 9, following two consecutive rate cuts in September and October. This time, however, policymakers are sharply divided over the central bank’s next move.
A long-awaited shift
After keeping rates unchanged for five straight meetings earlier this year—despite mounting pressure from President Donald Trump and his administration—the Fed delivered a cumulative 50 bps in cuts over the last two meetings.
What matters to investors now?
While markets are heavily pricing in another 25 basis-point cut at today’s meeting, investors are almost entirely focused on the underlying rationale and the tone of Chair Jerome Powell’s remarks, rather than the rate decision itself.
Close attention will also be paid to the Fed’s quarterly Summary of Economic Projections.
A return to the easing path
At its September meeting, the Fed cut rates by 25 bps, but the bigger catalyst for markets was the Open Market Committee’s projection of two additional cuts this year—October and December. With those projections nearly realized, attention now turns to how the Fed assesses the critical months ahead and the trajectory it envisions for monetary policy.
