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Fed Faces Conflicting Data and Political Tensions as December Verdict Approaches

Fed Faces Conflicting Data and Political Tensions as December Verdict Approaches

Bitget-RWA2025/11/24 02:08
By:Bitget-RWA

- The Fed faces internal divisions over rate cuts amid conflicting signals on inflation and a weakening labor market. - A 10–2 vote to lower rates to 3.75%–4% masked broader disagreements, with markets now pricing <35% chance of further cuts in December. - Political pressures intensify as Trump criticizes Powell and pushes for Bessent to lead the Fed, despite Bessent's refusals. - Upcoming November 20 data on payrolls and manufacturing will be critical in resolving the Fed's policy uncertainty.

The Federal Reserve is facing a pivotal moment as mixed signals from the U.S. economy make its policy decisions increasingly complex.

revealed significant disagreement among officials about whether to continue lowering interest rates. Policymakers are divided, with some worried about a softening job market and others focused on ongoing inflation. The 10–2 decision to cut rates by 25 basis points to a 3.75%–4% range , as “many participants” preferred to keep rates unchanged. This lack of consensus has left investors uncertain, and traders now estimate at the upcoming December meeting.

Fed Faces Conflicting Data and Political Tensions as December Verdict Approaches image 0

The Fed’s challenge is intensified by contradictory economic trends. Inflation continues to exceed the 2% goal—

his worry that inflation remains “stuck at 3%”—while other indicators point to economic weakness. essential data gathering, making it harder to assess key statistics such as job growth and consumer spending. Meanwhile, in 2026, attributing his optimism to falling energy prices and tax cuts from the Trump administration. However, and falling consumer sentiment as warning signs of a possible downturn.

Political dynamics further complicate the situation.

Fed Chair Jerome Powell for not moving faster on rate cuts and has repeatedly suggested Scott Bessent for the Fed’s top job—even though Bessent has declined. Trump’s influence is also seen in his calls for a more forceful monetary policy, which could alter the Fed’s direction if a new chair is appointed before May 2026. , a strong supporter of Powell, has recently reinforced expectations for a December rate cut, arguing that the fragile job market is a bigger concern than inflation.

Forthcoming economic reports will play a crucial role in determining the Fed’s next steps.

on employment, jobless rates, and manufacturing output. These results could either support the Fed’s cautious approach or prompt calls for tighter monetary policy. For now, the central bank must steer through a period of ambiguity, where conflicting economic data and political influences intersect. As officials wait for more clarity, markets remain on edge, anticipating a policy move that could reshape the U.S. economic outlook.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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