2025-12-31 03:20:19

The Federal Reserve's December meeting minutes are out, and the details are worth paying attention to. In short, policymakers are engaged in a tug-of-war between inflation and employment, and this dispute will directly determine the interest rate trajectory after 2025.

**The rate cut has already been implemented, and divergence is the focus**

Three weeks ago, the Fed completed its third rate cut of the year, bringing the interest rate down to 3.50%-3.75%. It sounds like everything is settled, but in reality, 3 out of 12 decision-makers voted against it. Powell claimed at the time that rates were at a "balanced point that protects employment and curbs inflation," but once the minutes were released, his conciliatory statement clearly didn't convince everyone.

What are the officials' true thoughts? Most are cautious about the risk of a slowdown in employment, while still believing that the inflation threat has not fully dissipated. However, if subsequent data performs well—especially if inflation continues to approach the 2% target—they are open to further rate cuts.

**Market vs. Fed betting game**

The official dot plot projects only one rate cut in 2026, with inflation falling to 2.4% by the end of the year. Sounds conservative, right? The trading market doesn't see it that way. According to the latest CME data:

· The probability of at least a 25 basis point rate cut before March 2026 exceeds 50%
· There is a 6.5% chance of a bold 50 basis point double cut

This indicates that the market's optimism about the Fed's stance next year far exceeds the officials' own expectations.

**Variables are coming: new chair candidate and January meeting**

Next month, two events will stir the market. First is the Fed's policy meeting on January 27-28, which sets the tone for the new year's policy direction. More importantly, Trump has already hinted that he will announce his nomination for the Fed Chair next month.

Candidates each have their own style. Kevin Wash (55) is a former Fed governor advocating for policy independence and deep reforms; Kevin Hasset (63) is a White House economic advisor who is more friendly to easing policies and has publicly stated that he would "cut rates more aggressively" if in charge. Who ultimately takes the helm will essentially determine the Fed's rhythm and market trend for 2025.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

7 Likes

Reward
7
7
Repost
Share

Comment

0/400

AirdropBuffet

· 11m ago

Powell's "balance point" statement is really brilliant; he didn't even notice that 3 out of 12 people opposed him. The market and the Federal Reserve are doing their own things; this show is quite interesting to watch. If Haskett takes office, the crypto circle will go wild; "aggressive rate cuts" sound very comfortable. The chairperson candidate is the biggest wild card next year, more important than any data. The minutes are just an excuse for future decisions.

View OriginalReply0

BrokeBeans

· 21h ago

Still playing psychological games, huh? Powell's "balance talk" really isn't convincing anyone. The market going against the Federal Reserve, I've been expecting this for a while. Choosing the new chair feels like the real deciding factor. Haskett's aggressive rate cut sounds very tempting. What does 3 dissenting votes mean? They've been divided internally for a long time. Inflation hasn't fully dissipated yet, and they're already thinking about further rate cuts. That logic doesn't quite hold up. Only one rate cut in 26 years? I bet the market wins; CME data is right there. Wosh or Haskett, this choice basically determines the fate of our wallets. Let's wait for the January 28th meeting; it might be the real turning point.

View OriginalReply0

NotAFinancialAdvice

· 22h ago

Powell's so-called balancing point is really vague; once the minutes are released, the market will see through it all. If Haskett takes office, he will directly cut interest rates aggressively, and someone will end up crying. The Fed's internal conflicts are too severe; three dissenting votes show there's no real consensus. A cut in 2026? Come on, the market is already betting on 50 basis points; officials are too conservative. Trump's move changed the entire market landscape; the real key is the chairperson selection.

View OriginalReply0

ContractTester

· 22h ago

Powell's "balance point" statement is ridiculous. What do three dissenting votes mean? It just shows that there is no consensus internally at all. The market is betting on rate cuts that are much more aggressive than official expectations. It feels like the Federal Reserve might be forced to follow suit by 2026. The main factor still depends on who the new chair will be. If Haskett takes over, there's a high chance of an aggressive rate cut right away. The data on paper is all fake; we’ll just have to see what the January meeting says next month. When it comes to rate cuts, instead of looking at the minutes, it's better to watch how market traders are betting.

View OriginalReply0

WalletAnxietyPatient

· 22h ago

Powell's balancing act is really slick, all three dissenting votes were brushed aside? I think it's a toss-up. The market's gamble this time is pretty fierce, just wondering how loose the Fed will be next year... If Haskett takes office, the crypto world should celebrate; this guy is clearly a rate cut fanatic. Once again, the chairmanship race is stirring things up; the 2025 chess game isn't that simple. Inflation isn't dead yet, and employment is starting to falter again; the Fed's days are really tough. The market is overly optimistic, this signal doesn't seem right... beware of buying at high levels. We've seen many instances where rate cut expectations were proven wrong; this time, I won't be too aggressive in the bullish outlook. The dot plot is all lies; the key is who Trump chooses as chair. The tug-of-war between employment and inflation is exhausting... how can ordinary people live? A 6.5% probability of a 50 basis point hike? That's a pretty big bet, everyone.

View OriginalReply0

SocialFiQueen

· 22h ago

Powell's "balance point" statement is really perfect. Out of 12 people, 3 oppose it. Is that called a balance? I think next year, the direction of interest rates will entirely depend on who the new chair is. The market is more optimistic than Federal Reserve officials. How big is this spread? Really, if Haskett takes the position, let's prepare for a feast of aggressive rate cuts. It's another act of "officials say one thing, markets bet another," which has become a habit. When inflation approaches 2%, it's the real test. The data quality directly determines the subsequent pace. Either Kevin can set the tone for 2025, and it feels like Trump has played this hand quite clearly.

View OriginalReply0

AirdropSweaterFan

· 22h ago

Powell's "balance point" statement is really impressive, a set of words on paper, but another in his heart. The market is again betting against the Federal Reserve, this routine has been played out too many times. The new chairman candidate is the real key, if Haskett takes office, the crypto market is probably going to take off. The rate cut has been implemented but disagreements still exist, frankly, no one has confidence. CME's probability data looks optimistic, but let's wait until the new chairman is decided before making any conclusions. There are quite a few variables in this game, the January meeting is basically a ticking time bomb.

View OriginalReply0