Fed likely to lower rate but may pause follow-up cuts

Core Viewpoint - The Federal Reserve is facing a contentious meeting that will test Chair Jerome Powell's ability to secure support for a third consecutive interest rate cut amid a divided committee and mixed economic signals [1][2]. Economic Conditions - The Fed's 19-member rate-setting committee is sharply divided on whether to lower borrowing costs, with inflation remaining elevated while hiring is weak and the unemployment rate has risen [2][3]. - The unemployment rate increased to 4.4% in September, marking the highest level in four years, and companies reportedly shed 32,000 jobs in November according to ADP [13]. Committee Dynamics - Some economists predict that three Fed officials may vote against the proposed quarter-point cut, potentially leading to the most dissenting votes in six years [3]. - The potential for greater disagreement within the committee is seen as a sign of healthy debate, although sharp splits could undermine financial market confidence [6][12]. Future Outlook - Most economists expect a "hawkish cut," where the Fed will reduce rates while signaling a pause to assess the economy's health [8][15]. - Fed officials will have up to three months of backlogged jobs and inflation data to consider before their late January meeting, which could influence future rate decisions [14].