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Thursday Nov 13 2025 00:00
2 min
A recent Reuters survey revealed that 80% of economists anticipate the Federal Reserve to cut its benchmark interest rate again by 25 basis points at its upcoming December meeting. This expectation is driven by concerns about a slowing labor market, although some members of the Federal Open Market Committee (FOMC) have reservations.
There is a clear division within the FOMC regarding whether an additional rate cut is warranted, particularly in the face of missing key economic data due to the previous government shutdown. Federal Reserve Chairman Jerome Powell has highlighted that a December rate cut is not a foregone conclusion.
Abigail Watt, a US economist at UBS, suggests that the labor market remains relatively soft, supporting the case for a December rate cut. However, she cautioned that upcoming economic data could alter this assessment. She also noted that disagreements over the extent to which labor market concerns dominate inflation dynamics may intensify in the coming year.
The Personal Consumption Expenditures (PCE) index, the Fed's preferred inflation gauge, has remained above the 2% target for over four years. Josh Hirt, a senior economist at Vanguard, warns that prolonged inflation could impact the Fed's credibility. Hirt believes it is essential to approach the idea that tariff-driven inflation is purely transitory with caution.
The US economy is expected to slow to a 1.0% growth rate in the current quarter, following a 3.8% expansion in the second quarter. In the longer term, annual growth is projected to average around 1.8% through 2027, a level that Fed officials deem consistent with maintaining stable inflation.
Despite private sector data suggesting layoffs, approximately 70% of survey participants believe that job growth has remained largely stable since the government shutdown began. Stephen Juneau, a US economist at Bank of America Securities, suggests that the labor market is cooling but not collapsing. He adds that more evidence of a deteriorating labor market is needed before a December rate cut is certain.
Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients.
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