The Federal Reserve's December Interest Rate Decision is Uncertain

In recent years, the U.S. economy has been under dual pressure from inflation and policy adjustments. From low inflation in 2021 to soaring inflation in 2022, and then gradually easing in 2023, the issue of inflation has always been the core focus of U.S. economic policy.

Looking ahead, the market is paying close attention to the Federal Reserve's policy direction and changes in inflation trends. Although there was a general expectation that the Federal Reserve would continue to cut interest rates in 2025, the pace of rate cuts may slow down. Current signs indicate that there is significant uncertainty about whether the Federal Reserve will cut rates again in December.

In fact, U.S. retail sales in October slightly exceeded expectations, indicating a positive economic momentum for the fourth quarter. Combined with substantial upward revisions to September data and news of rising import prices, traders have lowered their expectations for a rate cut in December.

Boston Fed President Collins stated that she believes the urgency for a rate cut is not high, but does not rule out the possibility of the Federal Reserve lowering rates again at the meeting on December 17-18. However, she also admitted that the uncertainty of the economic outlook would limit guidance on monetary policy.

Meanwhile, Chicago Fed President Goolsbee expects that the Federal Reserve is likely to cut rates by four basis points this year and by a full percentage point next year, which is consistent with previous forecasts.

In summary, there is significant suspense regarding the Federal Reserve's rate cut in December, with the market generally believing the possibility is low, but the specific direction still needs close attention.