Markets rethink December rate cut amid Fed doubts

Federal Reserve Chair Jerome Powell has hinted at the possibility of a December rate cut, but recent remarks from his colleagues suggest that there is apprehension within the central bank regarding this decision. The markets have adjusted their expectations accordingly, with the probability of a rate cut now at a coin toss, according to the CME Group’s FedWatch tool.

Krishna Guha, from Evercore ISI, noted that while the likelihood of a December cut is still more probable than not, there is only a 55-60% chance of it happening. The implied probability of a rate cut was at 49.4% as of Thursday afternoon, a significant drop from a month ago when the market was assigning a 95% probability of a reduction.

The uncertainty surrounding the decision stems from a lack of official data due to the government shutdown, which has now been resolved. Some Fed officials are concerned about making decisions without all the necessary information, especially given the softening labor market and inflation levels that are still above the Fed’s 2% target.

Boston Fed President Susan Collins recently made a blunt assessment of the situation, expressing her reservations about cutting rates further. She believes that the economy remains solid despite the slowdown in hiring and that cutting rates could potentially push inflation higher, especially with the uncertainty surrounding tariffs.

Collins’ stance aligns her with a more hawkish group within the Fed, which includes regional presidents who have expressed similar concerns. On the other side of the debate are Governors who have voted against rate cuts in favor of more substantial reductions.

Chair Powell now faces the challenge of building consensus within the Federal Open Market Committee, especially with dissenting opinions becoming more prevalent. The possibility of a “hawkish cut” has been suggested, where the committee agrees to one more reduction but signals that further cuts are unlikely.

Traders are anticipating a softer stance from the Fed come January, with futures pricing indicating a 70% probability of a cut to kick off the new year if the FOMC decides to skip December. Powell will need to navigate these differing opinions to ensure the stability of the economy moving forward. As we move into a new year, it’s important to reflect on the past and make plans for the future. One way to do this is by setting goals for the upcoming year. Setting goals can help you stay focused, motivated, and on track to achieve what you want in life.

When setting goals, it’s important to be specific and realistic. Setting vague goals like “I want to be happier” or “I want to lose weight” can be overwhelming and hard to measure. Instead, try setting specific goals like “I want to exercise for 30 minutes three times a week” or “I want to read one book a month.” These goals are more concrete and easier to track progress on.

It’s also important to set realistic goals. Setting goals that are too ambitious can set you up for failure and disappointment. Instead, break your goals down into smaller, more manageable steps. For example, if your goal is to save $1,000 by the end of the year, break it down into saving $20 a week. This makes the goal more achievable and less daunting.

Another important aspect of goal setting is to make sure your goals align with your values and priorities. If your goal is to spend more time with your family, but you’re constantly working late hours, you may need to reevaluate your priorities and make changes to your schedule to make time for what’s important to you.

In addition to setting goals, it’s important to regularly review and adjust them as needed. Life is constantly changing, and what may have been important to you at the beginning of the year may not be as important later on. By regularly reviewing your goals, you can make sure you’re still on track and make any necessary adjustments.

Setting goals is a great way to take control of your life and work towards the future you want. By being specific, realistic, and aligned with your values, you can set yourself up for success in the new year and beyond. So take some time to think about what you want to achieve and start setting goals that will help you get there.