The BareStory
The U.S. Federal Reserve is widely expected to announce an interest rate cut this week at the conclusion of its final policy meeting of the year. Market indicators suggest a high probability of a quarter-percentage-point reduction. The decision comes amid what is described as divided sentiment within the rate-setting committee, with some members reportedly concerned about persistent inflation while others aim to prevent further weakness in the labor market. Investors are awaiting a post-meeting statement and a news conference by Chair Jerome Powell for clarity on the central bank's outlook.
Recent surveys indicate a varied outlook on the U.S. economy. An early December poll of chief financial officers found that while 73% are optimistic about the economic outlook, they identified consumer demand as the biggest risk to their businesses. Another survey found that "continued high inflation" has become the top-ranked risk to the economy, followed by a potential burst in an "AI bubble." Both surveys noted expectations that inflation will remain above the Fed's 2% target for at least the next two years.
According to the CFO survey, 72% of respondents rated President Donald Trump's performance in the first year of his second term as "fair" or "poor." In the same poll, 20 of 22 CFOs described the president's trade policy as "poor" for business conditions, and 14 rated his immigration policy similarly. By contrast, the survey indicated that 62% of the CFOs described Treasury Secretary Scott Bessent's performance as "good" or "excellent."
Discussions regarding the future leadership of the Federal Reserve are also present. One survey found that 84% of respondents believe President Trump will nominate National Economic Council Director Kevin Hassett as the next Fed chair, though only 11% of those polled said he should be the nominee. That survey showed Fed Governor Christopher Waller as the favored choice. A majority of respondents in that poll also believe the next Fed chair will be more inclined to lower interest rates than Jerome Powell.
How it may affect me
As a U.S. reader:
• An expected interest rate cut could soon lower borrowing costs for new mortgages, auto loans, and credit cards, making it cheaper to take on debt.
• Your cost of living may continue to rise, as inflation is expected to remain above the Fed's 2% target for at least the next two years.
• Division within the Fed over fighting inflation versus protecting jobs creates policy uncertainty, which could impact future job availability and the prices you pay.
