Cooling Labor Market and Elevated Inflation Stoke Fed Divisions on Rate Cuts

The Federal Reserve has reduced interest rates by 25 basis points, despite expectations for economic growth in the coming year. This decision raises questions about the Fed's strategy and its capacity for further rate cuts, as discussed by former Council of Economic Advisers chair Glenn Hubbard, who suggests limited room for additional reductions through 2026.

President Trump indicated he is leaning towards nominating either former Federal Reserve governor Kevin Warsh or National Economic Council Director Kevin Hassett to lead the Federal Reserve next year, emphasizing the importance of consultation on interest rates. This statement was made during an interview with The Wall Street Journal.

Former President Donald Trump is reportedly leaning towards nominating either Kevin Warsh or Kevin Hassett to lead the Federal Reserve, as he prepares to finalize his selection for the position. This decision comes amid ongoing discussions about the future direction of U.S. monetary policy.

Key U.S. economic data on jobs and inflation is set to be released, which will be closely monitored by investors as they assess the likelihood of further interest rate cuts by the Federal Reserve. This data is crucial for understanding the current state of the labor market and inflation trends.

Long-term Treasuries declined, leading to the 30-year bond yield reaching its highest level since early September, influenced by the recent Federal Reserve interest-rate cut and its policy outlook. This shift reflects market reactions to the Fed's decisions and economic indicators.

Federal Reserve officials are currently divided over the potential for interest rate cuts, with discussions reflecting concerns about maintaining credibility regarding inflation. This debate is crucial as policymakers prepare for their upcoming meetings, which could significantly influence monetary policy direction.

US credit card debt is on the rise as the holiday season approaches, but the pace of increase is slower compared to the same period last year, according to the Federal Reserve and major credit trackers. This trend indicates a shift in consumer behavior as Americans continue to use credit cards but may be more cautious in their spending habits.

Top officials from the Federal Reserve, including Jeff Schmid from Kansas City, have issued warnings against complacency regarding inflation, emphasizing the potential rise in long-term borrowing costs if the Fed loses its credibility. This caution comes amid ongoing discussions about interest rate adjustments in response to economic conditions.