Mitsubishi UFJ: Fed's Policy in the Second Half of Next Year to Complicate Due to Leadership Changes
BlockBeats News, December 11th: Mitsubishi UFJ Financial Group stated that the Federal Reserve voted 9 to 3 to cut the interest rate by 25 basis points and acknowledged that the labor market is gradually cooling down. Powell also emphasized the significant downside risks facing the labor market.
On the inflation front, the Federal Reserve pointed out that if no new tariffs are imposed, goods inflation may peak in the first quarter of 2026, but the persistence risk of inflation still exists. Powell signaled that a rate hike is not the baseline expectation, and there are divergences among FOMC members between maintaining the interest rate and cutting it.
The latest released dot plot shows that the median expectation of the Federal Reserve is to cut the interest rate only once in 2026, a hawkish stance that is significantly more hawkish than the market's expectation of approximately 55 basis points (or slightly more than two rate cuts). Powell also emphasized that the Federal Reserve is currently in a "favorable position" to patiently observe the development of the U.S. economy.
Looking ahead, the policy outlook for the second half of next year may be complicated by changes in the Federal Reserve leadership, adding uncertainty to the market. (FXStreet)
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