The Federal Open Market Committee (FOMC) concluded its two-day policy meeting in the early hours of December 11th (Taiwan time), ultimately announcing, as expected, a 25 basis point (1 50 basis point) cut to the target range for the federal funds rate, bringing it to 3.50%–3.75%. This is the third rate cut since 2025, but the vote was 9-3, indicating that significant internal disagreements remain.
Following the meeting, Federal Reserve Chairman Jerome Powell held a press conference. He reiterated that while inflation has fallen significantly, it remains above the 2% target and recent progress has stalled; the labor market, while continuing to cool, is doing so more slowly than expected, but remains generally sound. Powell repeatedly emphasized that the Fed is currently "well positioned to wait," essentially declaring that the "policy recalibration phase" leading up to 2025 is nearing its end, and future actions will depend entirely on economic data performance, rather than a predetermined path.
In response, Nick Timiraos, a Wall Street Journal reporter often referred to as the "mouthpiece of the Federal Reserve," also summarized the four key points of Powell's press conference on the X platform:
- Powell practically declared that the "policy recalibration phase is complete"—they are now "in a good position to wait and see."
- He attributed the divisions within the committee to an unusual tension between the dual mandates of employment and inflation, and acknowledged that both sides of the debate had valid points.
- He unexpectedly pointed out that job growth might be negative due to statistical measurement issues. In his own words, "The gradual cooling of the labor market continues, just a little slower than expected," which reduced concerns about inflation in the service sector.
- Even though interest rates are closer to neutral levels, a rate hike is not anyone's baseline scenario. Currently, opinions among committee members range from "that's enough" to "we need to cut rates further," but no one considers a rate hike to be the primary expectation.
Analysts interpret: No hawkish signals seen
Regarding Powell's remarks, analyst Anna Wong pointed out that although the dot plot shows only one rate cut in 2026, the overall policy statement and economic forecasts are still dovish – significantly raising the 2025 economic growth forecast, lowering the inflation path, and announcing the launch of a reserve management bond-buying program .
Meanwhile, Informa Global Markets offered a concise commentary on Powell's speech:
"The so-called 'hawkish rate cut' is nothing more than that." (The market had previously expected the Fed to implement a hawkish rate cut.)
