The Fed's December dilemma: Here's what to know

Core Viewpoint - The Federal Reserve is increasingly leaning towards a rate cut in December due to concerns over a weakening job market, despite potential dissent among committee members [2][3]. Economic Indicators - The number of Americans unemployed for 27 weeks or longer has been rising since May, indicating a cooling labor market, although there was a slight decline in the latest September report [4]. - Continuing claims for unemployment benefits have also shown a steady increase, further supporting the notion of weaker job data [4]. Federal Reserve's Position - Leading Fed officials, including New York Fed President John Williams, have expressed support for a near-term change in policy rates, suggesting a rate cut could happen in December [3][5]. - Current probabilities for a December rate cut have risen to 73%, up from as low as 33% prior to Williams' comments, with an 82% probability for a cut by January [6]. Committee Dynamics - There are several committee members who have historically opposed rate cuts or advocated for a cautious approach, which may lead to multiple dissents during the December meeting [5]. - Fed officials like Myron Waller and Bowman, along with President Williams, appear ready to support a rate cut, indicating a shift in the committee's stance [5]. Communication Strategy - The Fed's guidance is increasingly being communicated through press conferences rather than official statements, which may affect how future decisions are framed [9]. - There is a focus on balancing the decision-making process, weighing the potential regret of not cutting rates against concerns about inflation [11].