Fed's Battle Between Inflation and Jobs Drops Chances of December Rate Cut to 33%
- Fed's December rate cut odds dropped to 33% due to internal divisions and delayed labor market data. - October/November jobs reports delayed until post-Dec 9-10 meeting, removing key policy input. - 10-2 October voting split and cautious officials like Collins highlight policy uncertainty. - Bitcoin fell 20% while gold dipped below $4,000 as markets react to reduced cut expectations. - Analysts warn prolonged indecision risks volatility, with December outcome hinging on incoming data.
The likelihood of the Federal Reserve lowering rates in December has sharply declined to 33%,
The U.S. Bureau of Labor Statistics’ move to delay the October and November employment reports until after the Fed’s December gathering has deprived policymakers of crucial information. The October jobs data was canceled due to a government shutdown, and the November figures won’t be released until December 16, after the FOMC’s meeting on December 9-10. Without these updates, officials lack timely insights into the labor market, a vital component of their mandate to manage both inflation and employment.
Debate within the Fed has added to the uncertainty.
Market movements have reflected the Fed’s indecision.
Gold, often considered a safe haven during market stress, has also come under pressure.
Experts caution that the Fed’s ongoing indecision could extend market turbulence. “The Fed’s challenge in juggling inflation and employment is creating a climate of uncertainty,” one strategist observed, noting that the central bank’s dual objectives are increasingly in conflict.
Looking forward, the outcome of the December meeting will depend on new data and further signals from the Fed. Should officials decide to keep rates unchanged, the “higher-for-longer” scenario may persist, raising borrowing costs for both households and companies. On the other hand, a 25-basis-point cut would mark a cautious shift toward a more supportive policy, potentially lifting stocks and easing strain on the housing market.
As the Fed faces these pivotal decisions, markets are adopting a wait-and-see approach, closely watching the December meeting and the return of key economic indicators.
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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