One Federal Reserve, many voices?

Daily update

The Federal Reserve’s December 2025 policy decision is finally revealed. The Fed has seemingly not attempted to change general expectations of a rate cut. Conspiracy theorists might suggest not delaying the meeting until the release of employment data implies Fed Chair Powell is confident about cutting—but there is likely to be some dissent. Dissent may cause trouble for Powell’s successor, if they command less respect than Powell.
The cut is probably not meant to stimulate an economy in a rising inflation environment. The Fed cannot really change inflation driven either by supply shocks or by tariffs; but as those price pressures exist, it would be peculiar to try and stimulate the other parts of the economy where rates could impact inflation.
This rate cut (and a potential future rate cut) should be seen as labor market insurance. The Fed does not want a rise in the fear of unemployment. If that were to happen, the ensuing slowdown in consumption and downward spiral of growth may be too rapid for the Fed to be able to respond. Prevention is better than cure.
China’s November inflation data was largely as expected, with fresh fruit and vegetable prices adding to headline consumer prices. China remains in a low inflation environment.