Fed Officials Increasingly Hesitant to Cut Interest Rates in December
Several Federal Reserve (Fed) officials have begun to dampen expectations of an interest rate cut at their December meeting in recent days. They believe the available economic data is still insufficient to make a major decision, especially after the prolonged US government shutdown delayed the release of inflation and labor market data. Without a clear picture of the direction of inflation and the strength of the economy, their general stance is: it's best to err on the side of caution.
In terms of policy tone, the hawkish line of officials has been the most assertive. Kansas City Fed President Jeffery Schmid and Boston Fed President Susan Collins believe interest rates are currently at a "fairly tight" level and see no immediate urgency to lower them. On the other hand, more moderate officials, such as Atlanta Fed President Raphael Bostic, have adopted a "wait-and-see" approach. He hasn't ruled out a cut, but has emphasized that a December decision will depend heavily on data released in the coming weeks.
As a result of these mixed statements, the market now views the December meeting as a "coin toss": the odds of a rate cut or a rate hold are considered nearly even. The probability of a 25 bps rate cut, which had previously approached 90%, has now dropped sharply to just 40–50%. For market participants, the next focus will be on delayed economic data and the Fed's meeting minutes—which will determine whether the central bank is ready to ease or maintain its tighter policy even longer.
Source : Newsmaker.id
