An Unusually Divided Fed Is Expected to Deliver a Rate Cut

An Unusually Divided Fed Is Expected to Deliver a Rate Cut By Vicky Ge Huang

When Federal Reserve officials gather today for their final two-day rate-setting meeting of the year, as much as half the room might not want a cut. But the final call will rest with Fed Chair Jerome Powell, who appears poised to secure one despite the unusual opposition. Elsewhere, the Reserve Bank of Australia left interest rates on hold as expected on Tuesday, but hinted that the next move will be a hike next year. And Bank of Japan Gov. Kazuo Ueda said inflation in Japan is unlikely to speed up at a dangerous pace, suggesting that the pace of rate increases will be gradual.

Top News An Unusually Divided Fed Is Expected to Deliver a Rate Cut

The focus this week will be whether Federal Reserve Chair Jerome Powell can stitch together enough consensus to minimize dissents

to an interest-rate cut. That would likely happen by cutting rates a quarter point to a range of 3.5% to 3.75% and then signaling a higher bar for further easing, through changes to the postmeeting statement. This cut-and-cap approach would echo how Powell concluded a sequence of three rate cuts in 2019 that also divided the committee.

WSJ Q&A: Submit Your Questions Ahead of Pivotal Fed Meeting

The Journal is inviting subscribers to submit questions about the U.S. economy , markets and political landscape ahead of the Federal Reserve's interest rate decision on Dec. 10.

Australia Central Bank Keeps Rates on Hold But Makes Hawkish Tilt

Following a two-day policy meeting, the RBA held the official cash rate at 3.60% -where it has been since August. The decision follows a string of reports showing a deteriorating inflation outlook and warnings from the RBA that the economy is starting to grind up against capacity constraints.

BOJ Governor Sees Little Danger of Rapid Pickup in Inflation

"At the moment, we don't see a very high risk of inflation , especially underlying inflation, accelerating," Bank of Japan Gov. Kazuo Ueda said at an event held by the Financial Times on Tuesday.

U.S. Economy Trump Unveils $12 Billion Bailout for Farmers

The Trump administration announced $12 billion in aid

to struggling U.S. farmers as the agriculture sector grapples with the fallout from the president's far-reaching tariffs.

BLS to Skip October PPI Report

The Bureau of Labor Statistics will skip publication of its delayed report on wholesale-price inflation, and will instead roll those figures into a postponed November report to be published on Jan. 14, the agency said Monday.

Trump: U.S. Will Allow Nvidia H200 Chip Sales to China, Get 25% Cut

President Trump said he would let Nvidia export its H200 chip to China and that the U.S. would receive a 25% cut , his latest bid to make money for the government in an unusual agreement with a private company.

401(k)s Are Minting a Generation of 'Moderate Millionaires'

The 401(k) millionaire club is growing. As 2025 comes to a close, many individual investors are finding holiday cheer in statements showing they have crossed the $1 million milestone .

Key Developments Around the World Markets Eye China Economic Summit for Clues on 2026 Policy Plans

China's ruling elites will soon gather to hammer out the priorities

for the world's second-largest economy next year. Markets will look to the year-end agenda-setting Central Economic Work Conference for clues into Beijing's 2026 plans.

China's Manufacturing Is Booming Despite Trump's Tariffs

German Exports Inched Up in October Despite U.S. Weakness

German exports edged up in October , helped by resilient demand for goods from within the European Union, which offset a tariff-impacted slowdown in exports to the U.S.

Investors Remain Exposed to Potential Dollar Losses, BIS Says

Investors outside the U.S. remain exposed to the risk of losses

stemming from possible falls in the dollar, said Hyun-Song Shin, head of the monetary and economic department at the Bank for International Settlements.

Financial Regulation A Financial Watchdog's Fate Is in Limbo. Idled Employees Are Still Being Paid.

Employees at the Consumer Financial Protection Bureau wait while the Trump administration's mass layoffs at the agency are challenged in court .

SEC's Top Accountant Is Weighing Changes to Audit Inspections, Conflict-of-Interest Rules

The Securities and Exchange Commission is evaluating whether to change rules

around conflicts of interest for auditors and their clients, how its audit watchdog handles inspections of accounting firms and the cost of complying.

Forward Guidance Tuesday (all times ET)

9 a.m.: Johnson Redbook Retail Sales Index

10 a.m.: Job Openings & Labor Turnover Survey

6 p.m.: U.S. Federal Open Market Committee meeting

Wednesday

8:30 a.m.: Employment Cost Index

9:45 a.m.: Bank of Canada interest rate announcement

10 a.m.: Online Help Wanted Index

2 p.m.: Federal Reserve economic projections

2 p.m.: U.S. interest rate decision

Research Expect Tough Love from Fed's Powell, Goldman Sachs Says

Federal Reserve Chair Jerome Powell will likely convey that the bar for future cuts has risen, and explain why some participants opposed a cut, say Goldman Sachs analysts. The investment bank reckons two officials will oppose cutting rates on Wednesday, and that five will lay out hawkish rate projections on the so-called dot plot. The Fed can't box itself in, given the dearth of up-to-date economic data, but "a January cut could turn out to be appropriate," the Goldman analysts said. - WSJ staff

Fed Rate Cut Widely Expected; Vote Split, Forecasts Will Be Key

Market pricing shows a nearly 90% probability of a 25-basis-point Federal Reserve rate cut on Wednesday but BNY analysts say investors should take guidance from the voting split. "There are a few other things to watch at this gathering, including how widely supported the anticipated rate move will be across the Committee--will there be dissents as there were at the October FOMC?," they ask. New forecasts for the rate path--the dot plot--will also be published as part of the quarterly Summary of Economic Projections. "Finally, we may very well get an announcement that the Fed is ready to step in and provide liquidity support to fund markets at year end and into 2026," the analysts say. - Emese Bartha

Citi Sees Further String of Fed Cuts

Economists at Citi expect that a Fed rate cut on Wednesday won't be the end of the central bank's easing. Further rate cuts could well be on the way in January and March, the Citi team argue. Yet given continuing delays in official economic figures, the Fed may hesitate to signal its next moves too directly, they suggest. "Guidance and changes to projections will be limited due to delayed data," the Citi team write. - Matt Grossman

RBA's Bullock Sounding Hawkish at Press Conference

Reserve Bank of Australia Gov. Michele Bullock sounded hawkish at her press conference, after a policy decision to leave interest rates on hold. She specifically ruled out further cuts and said the board is worried about inflation. Bullock added that the policy debate in 2026 will likely be on an "extended pause" or look at the question of a hike. Bullock is usually reluctant to offer forward guidance, but appears to have put that aside for now. There's clearly little wriggle room for the board, and any hint of danger in the 3Q inflation in January could trigger a February rate hike. - James Glynn

About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to [vicky.huang@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

December 09, 2025 07:18 ET (12:18 GMT)