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Apr 3, 2025 4:52 pm
Global Media Network
Fed Support Grows for December Rate Cut Plan
A top official at the central bank has voiced clear support for another rate cut at the meeting planned for December. This signal has added new energy to the growing debate inside the bank about how to guide the economy through slower job growth and pressure on consumers. The comments come as many market watchers look for signs of the next steps in monetary policy after two cuts earlier in the fall. The official said that the job market has weakened for many months and that recent data points to a clear slowdown in hiring. He explained that the latest trends show a drop in demand for workers across many areas of the economy. He added that this pattern may not change soon and that a new cut could help ease the stress on people facing fewer job options. His view is that the risk to the labor market now outweighs the fear of rising prices. Other officials have shared different views. Some have warned that more cuts could fuel inflation. They think the job market needs time to adjust and that lowering rates again may bring new risks. A number of regional leaders at the bank have spoken against more easing in recent days. They believe that inflation remains a major concern and that lower rates may give households and businesses more room to spend, which could raise prices. The next meeting of the policy-setting committee will take place on December 9 and 10. This meeting is expected to draw strong attention from investors and analysts. Many want to know if the group will choose another quarter-point cut after reducing rates by the same amount in September and October. These earlier cuts were meant to help support the economy through slower growth and supply pressures. Another senior official spoke earlier this week and urged caution. He said that the bank should move slowly as it weighs future actions. Another official said that conditions must be very clear before she would support more easing. These mixed messages have added to uncertainty about the outcome of the December meeting. The official who supports the cut said he favors a small move of a quarter point. He has been consistent in calling for more easing in recent months. He said that, even without full government data during the long shutdown, there is enough private information to understand the state of the economy. This information points to weak demand for workers, less spending strength among households, and rising concerns for people with lower or middle incomes. He also said that the impact of tariffs on prices seems to be easing. That means inflation is not as strong as many feared earlier in the year. He believes that another cut would offer needed support without causing new price pressure. He used the term risk management to explain the goal. This means taking a small step to prevent a larger problem later. The chair of the central bank has also used the same term in recent remarks. He added that policy is still restrictive. That means borrowing remains harder for families and small firms. He worries that this tight policy may be hurting people who have the least room in their budgets. A cut in December, he said, would help move policy toward a more neutral range. This could help create better conditions for workers and help counter the slowdown in hiring. Some critics argue that the shutdown made it harder to track the true state of the economy. They say the bank may not have enough information to make a sound decision. But the official rejected that view. He said the bank has access to many private reports that show clear signs of stress. These reports include job postings, wage trends, and consumer spending data. He said that these sources offer a picture that is not perfect but still strong enough to guide policy. As the December meeting approaches, many people in the financial world will watch closely for any comments from bank leaders. Markets remain split on what the committee will do next. Some traders expect another cut, while others think the recent slowdown may not be enough to push the group toward more easing. The debate highlights how the central bank is trying to balance two major goals. One is to support a job market that is losing strength. The other is to protect the economy from new price risks. With the next meeting only weeks away, the Fed December rate cut question will stay at the center of attention for many groups, from workers to investors to business owners.
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