As the U.S. government shutdown continues, the Federal Reserve cut interest rates by 25 basis points in October despite the lack of release of important economic data.
With the end of the lockdown, all eyes are on the FED’s final interest rate decision for 2025 in December, and Nick Timiraos, a reporter for the Wall Street Journal who is known as the FED’s spokesperson, shared his expectations regarding the FED’s interest rate decision in December.
Nick Timiraos, a known Fed insider, said the Fed has major disagreements over interest rate decisions.
Huge disagreement among Fed members!
Timiraos reported that disagreements within the Fed are deepening over the December interest rate cut.
Timiraos noted that there is an unusual conflict between the Fed’s hawks and doves.
The high-profile figure said there had never been this level of separation during Jerome Powell’s nearly eight-year tenure.
“We’re seeing a rarely seen split among Fed members. Following the second rate cut at the end of October, hawkish members have become even more vocal. Hawks now believe further rate cuts are risky.”
Some Fed officials argue for lower rates because of slowing inflation and the limited economic impact of tariffs, while others cite stagnant inflation and the impact of tariffs as reasons not to cut rates.
Timiraos said the shutdown of the U.S. government and disruption of the release of critical data has further deepened divisions among member states.
Nick Timiraos recently said that Chairman Powell’s statement in his last press conference that “a December rate cut is not certain” was not a message to the market.
Timiraos said Powell’s statement was a message aimed at explaining the divisions among Fed members.
Interest rates are hovering around 3.75% to 4%, with markets still pricing in a rate cut in a rare clash between hawks and doves. According to the Fed Watch Tool, a 25 basis point rate cut is priced at 63.4%, while a rate hold rate is priced at 36.6%.
*This is not investment advice.
