Bloomberg Economics experts: The US Federal Reserve is heading for an interest rate cut despite divisions

Federal Reserve Chairman Jerome Powell is expected to push for a new quarter-point interest rate cut this week, despite growing concern among several monetary policymakers about inflation remaining at high levels.

The Fed cut interest rates for the second consecutive time in October, driven by the sudden deterioration in the US labor market over the summer, but this was followed by a wave of “hawkish” concern expressed by some officials, including five members with voting rights on monetary policy this year, indicating hesitation or unwillingness to support a third rate cut in December.

This growing division has been exacerbated by the lack of recent economic data due to the government shutdown, which lasted for most of October and November. The latest inflation figure available to monetary policymakers, released on December 5, dates back to September—a report unlikely to change the ongoing debate over monetary policy.

Amid this scene, investors showed, for about a week in mid-November, serious doubts about the likelihood of another cut, but much of this unusual debate was settled on November 21 when New York Fed President John Williams, seen as close to Powell, said he saw room for a cut “in the near term.” The market took the signal and now sees a rate cut next week as more than 90% likely.

Economists surveyed by Bloomberg expect the Fed to pause before making two additional cuts in 2026, in March and September. There is some hope that the flow of new data—as statistical agencies catch up from shutdown-related delays—could help resolve the ongoing tension between the Fed’s dual mandates: containing inflation and maximizing employment. Nevertheless, new drama looms on the horizon, as President Donald Trump is expected to soon announce a successor to Powell, whose term ends in May. Kevin Hassett, a close Trump ally and one of his top economic advisers, is the frontrunner. This has raised concerns among some investors that the next Fed chair might push for rate cuts under Trump’s direction, potentially sparking inflation.

#ReboundTokenstoWatch
#DecemberRateCutForecast
#BitcoinPriceWatch
$BTC ‌
$ETH ‌
$XRP ‌