On December 1, 2025, the Federal Reserve is in a highly sensitive policy window. Chairman Powell's core task is to balance stubborn inflation pressures with the emerging risks of economic slowdown, while there are significant differences within the Federal Reserve about whether to continue cutting interest rates in December.
🏛️ Powell and the Federal Reserve's Policy Stance
Currently, Powell and the Federal Reserve's stance can be summarized as follows:
1. Data Dependence and High Caution
Powell emphasized after the October meeting that a rate cut in December is "far from a done deal." This reflects the Federal Reserve's cautious attitude amid complex economic data. Due to the previous government "shutdown" that delayed the release of key data such as non-farm employment and CPI for October and November, the Federal Reserve will be in a "data fog" before the December policy meeting, complicating decision-making.
2. Significant Internal Disagreements Exist
The "hawks" and "doves" within the Federal Reserve have differing opinions, with specific disagreements shown in the table below:
Camp Main Views Representative Figures
Doves are more concerned about the deterioration of the labor market and advocate for continued rate cuts. Federal Reserve Governors Mester, Waller, New York Fed President Williams, and San Francisco Fed President Daly.
Hawks view inflation as a major concern and are cautious about further rate cuts. St. Louis Fed President Bullard, Kansas City Fed President George, and Boston Fed President Collins.
3. Policy Focus: Weighing inflation against employment
· Inflation Remains a Key Target: Although inflation is above the 2% target, the Federal Reserve is also monitoring the persistent inflationary pressures that tariffs may bring.
· Employment Market Risks: Some officials are concerned about a weak labor market, and the U.S. government shutdown may also disrupt employment data, amplifying economic downturn risks.
📊 Focus on Recent Key Schedule and Market Expectations
In the next week to two weeks, several important events and data releases will occur, which may have a decisive impact on the Federal Reserve's decisions:
· Powell Public Speech: At 9:00 PM Beijing time on December 1, Powell will deliver a speech at a memorial event, and the market hopes to glean any signals regarding December's interest rate policy.
· Core PCE Price Index: To be announced on December 5. This is the Federal Reserve's most favored inflation indicator, and its performance is crucial.
· ADP Employment Data: To be announced on December 2, providing reference for private sector employment conditions.
Currently, according to the Chicago Mercantile Exchange (CME) "Fed Watch" tool, the market's expectation probability for the Federal Reserve to cut interest rates by 25 basis points at the December 10 meeting is between 67% and 85%. However, some analysts believe the Federal Reserve may adopt a "hawkish rate cut," meaning that while cutting rates, they will set a higher threshold for further easing through strong wording in their statement.
