Core Viewpoint - The Federal Reserve faces a critical decision point as it approaches the December meeting, balancing between a weakening labor market and persistent inflation nearing 3% [2] Group 1: Federal Reserve's Dilemma - Fed Chair Powell is caught between two factions: the "preemptive" camp advocating for a rate cut and the "cautious" camp insisting on no further cuts [2] - Market expectations for a rate cut have surged from 40% to 80%, putting Powell in a precarious position where any decision could lead to a split within the FOMC [2] - Powell is weighing two options: a "hawkish cut" of 25 basis points in December with a commitment to future restraint, or a "dovish pause" delaying decisions until January [2][3] Group 2: Economic Indicators - Economic data suggests a "stagflation" scenario, with a three-month average job growth falling below 100,000 without significant layoffs, and core inflation remaining steady at 0.3% month-on-month [3] - Concerns arise from the potential for prolonged economic stagnation if rates are cut too slowly or the risk of reigniting inflation if cut too quickly [4] Group 3: Leadership Pressure - The December vote represents not only a decision on economic direction but also a test of Powell's leadership, as he must navigate the delicate balance of opinions within the Fed [4] - Experts indicate that the outcome of the December 19 meeting will be crucial, with global risk assets already reacting to the uncertainty [4]