Fed Faces Balancing Act Between Inflation and Employment Amid Political and Market Scrutiny

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Fed Faces Balancing Act Between Inflation and Employment Amid Political and Market Scrutiny

Bitget-RWA2025/11/26 03:56

By:Bitget-RWA

- Fed officials remain divided on a December rate cut amid conflicting inflation and labor market signals. - Boston Fed's Collins opposes cuts, citing persistent inflation risks despite recent 119,000 jobs gain and 4.4% unemployment. - Trump's tariff-driven policies face criticism for sustaining high prices, mirroring Biden's inflation challenges. - Crypto sector shows resilience with $4.6B Q3 VC funding, as regulators push for digital asset tax clarity under Trump . - Fed's December decision will balance

Federal Reserve policymakers are split on whether to lower interest rates in December, as mixed economic indicators fuel ongoing debate. Boston Fed President Susan Collins, who has consistently urged caution, stated again on Friday that she "remains inclined to oppose" reducing the federal funds rate from its current 3.75%-4% band,

pointing to ongoing inflationary pressures

and signs of a weakening job market. Her comments highlight the central bank’s challenge in balancing inflation control with the risk of economic slowdown.

Recent employment figures have further complicated the outlook. The September jobs report, released earlier this month, revealed a modest increase of 119,000 nonfarm jobs, while unemployment ticked up to 4.4%—suggesting the labor market is losing steam

as indicated by the latest data

. Investors currently see a 35% chance of a 25-basis-point rate reduction at the December meeting, but Collins stressed that "monetary policy is now somewhat restrictive"

after the easing steps in September and October

. Her perspective aligns with a segment of Fed officials who prefer to wait for additional economic evidence before making further moves.

The political environment adds another layer of complexity for the Fed. President Donald Trump is facing increased criticism over his administration’s economic strategies, which have not yet succeeded in bringing down persistently high consumer prices. Despite promises to tackle inflation, Trump’s tariff policies have kept products like beef, coffee, and hardware

15% to 20% more expensive than before the pandemic

. His popularity has declined as Americans continue to focus on price stability, a challenge similar to what Biden faced with inflation during his first term

based on Reuters’ analysis

Fed Faces Balancing Act Between Inflation and Employment Amid Political and Market Scrutiny image 0

Market responses have been varied. While the anticipation of rate reductions often lifts risk assets, some industries have moved against the trend. DexCom Inc., a company specializing in diabetes technology, saw its stock climb 3.9% after New York Fed President John Williams suggested possible easing, even as the firm faces a separate class-action suit

related to its glucose monitoring products

. At the same time, crypto-related stocks have shown strength. CleanSpark, a

Bitcoin

mining company, reported a net profit of $364.5 million for fiscal year 2025, a sharp reversal from a $145.8 million loss the year before, though its shares fell 3.1% after

failing to meet revenue expectations

In the digital asset sector, regulatory issues are becoming increasingly urgent. More than 65 crypto organizations, including the

Solana

Policy Institute and

Uniswap

Labs, have

called on Trump to instruct the IRS and Treasury

to finalize tax rules for digital assets, including a $600 de minimis exemption for taxable transactions. The demand for regulatory clarity comes as venture capital investment in crypto rebounds,

with $4.6 billion invested in Q3 2025

—the second-highest quarterly total since the FTX collapse. Analysts at Galaxy Digital attribute this growth to optimism about regulation, especially under the Trump administration, with the recently enacted GENIUS Act seen as a driver for institutional involvement

according to Cointelegraph’s analysis

As the December meeting draws near, the Fed’s choice will depend on whether it decides to prioritize fighting inflation or supporting the job market—a dilemma that has shaped its decisions for years. With markets preparing for potential turbulence and political stakes rising, the central bank’s next steps could define the economic landscape for the coming year.

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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