Fed's Fractured Vote Signals Trouble Ahead for Future Rate Cuts

Fed's Fractured Vote Signals Trouble Ahead for Future Rate Cuts By Vicky Ge Huang

Federal Reserve officials cut interest rates for a third straight meeting but signaled they might be done for now in the midst of unusual divisions over the path forward. At the press conference following the rate decision, Fed Chair Jerome Powell pointed to a job-market risk that economists have been worried about for months: Official data could be drastically overstating recent hiring. And the Fed said it is ready to expand its balance sheet by buying short-term Treasury securities in a bid to head off bouts of pressure in overnight lending markets critical to the broader financial system.

Top News Fed's Fractured Vote Signals Trouble Ahead for Future Rate Cuts

Jerome Powell pushed through a rate cut Wednesday

over the broadest reservations of his nearly eight-year tenure, and in doing so, implicitly delivered a pointed message to President Trump and his own successor: Cutting rates is harder than it looks.

The decision drew three dissents-two from officials who opposed any cut and one from a Trump ally who wanted a larger reduction.

Fed Cuts Rates Again, Signals It May Be Done for Now

Fed Chair Jerome Powell Says U.S. May Be Drastically Overstating Jobs Numbers

Transcript: Fed Chair Jerome Powell's Postmeeting Press Conference

Fed to Resume Net Asset Purchases This Month

The Federal Reserve said it would start its balance-sheet expansion with $40 billion of securities purchases

this month, with plans to taper the pace of the new buying sometime next year.

Central Banks Around the World Bank of Canada Holds Policy Rate Steady, Sticks With Tepid Outlook

The Bank of Canada left its target for the overnight rate at 2.25% , adding that policymakers believe it sits at an appropriate level to keep inflation close to 2% while offering stimulus for an economy squeezed by tariffs.

Bank of Canada Attempts to Temper Excitement About Economy

ECB Unlikely to Follow Fed, But Currency Moves May Prove Decisive

Europe's leading central bank will not necessarily follow the Federal Reserve

in lowering its key interest rate, but policymakers may face growing pressure to do so if the pace of easing significantly weakens the U.S. dollar.

Swiss National Bank Holds Key Interest Rate at 0%

Switzerland's central bank left its key interest rate unchanged

for a second straight meeting, but signaled it is open to a further cut that would take borrowing costs below zero if a sustained period of falling prices threatens.

Turkish Central Bank Cuts Rates Again

Turkey's central bank cut interest rates again

at its latest meeting, to 38.0% from 39.5%, after inflation cooled more than expected in November.

Brazil's Central Bank Holds Its Key Rate at Lofty 15%

Brazil's central bank on Wednesday held its key interest rate at 15% -among the world's highest levels-as expected, and maintained its hawkish outlook as inflation remained above target.

Philippine Central Bank Cuts Rates as Economy's Outlook Withers

The Philippine central bank delivered a fifth straight rate cut -by 25 basis points to 4.50%-at its final meeting of the year, as it looks to cushion the economy from the fallout of a political scandal.

Financial Regulation Treasury's Bank Regulation Takeover Has a New Goal: AML Rules

The Trump administration is preparing a shake-up of anti-money-laundering rules , in an effort to overhaul a system for catching illicit transactions that banks complain are costly and ineffective.

Big Banks 'Debanked' Politically Sensitive Industries, Regulator Finds

A top banking regulator said it had found early evidence that nine of the biggest U.S. banks, including JPMorgan Chase and Bank of America, had improperly refused to do business

with a range of politically hot-button industries.

Forward Guidance Thursday (all times ET)

8:30 a.m.: U.S. International Trade in Goods & Services

8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims

10 a.m.: State Employment and Unemployment

10 a.m.: U.S. Housing Vacancies

10 a.m.: Monthly Wholesale Trade

Friday

8 a.m.: Federal Reserve Bank of Philadelphia President Anna Paulson speaks before the Delaware State Chamber of Commerce

8:30 a.m.: FRB Cleveland President Beth Hammack speaks at University of Cincinnati Real Estate Center Roundtable Series event

10 a.m.: Personal Income and Outlays - Estimated Date

Research Strategists Weigh In on Fed Signals to Markets

Strategists are noting the nuances in the Fed's statements following its 25-basis-point rate cut. "There were some dissents, but investors should be positioned for the Fed to continue easing, but perhaps the pace of easing slows," Scott Helfstein, Global X's Head of Investment Strategy says in a note. Karl Schamotta, Chief Market Strategist at Corpay, adds that "the all-important 'dot plot' Summary of Economic Projections showed the median policymaker still expects to cut rates only once more in 2026-a less aggressive pace than the two moves currently priced into futures markets." - Patrick Sheridan

Fed Rate Cut Reflects Concern on Economy's Underlying Momentum

With its third straight rate cut, the Federal Reserve is sending a clear message: it's no longer just watching inflation-it's managing risk, says Bolvin Wealth Management's Gina Bolvin in a note. This decision reflects growing concern about the economy's underlying momentum, she says. While inflation has cooled, the Fed is also acknowledging that policy lags, geopolitical uncertainty, and tighter credit conditions are weighing more heavily on the outlook, she says. "This is a Fed trying to guide the economy to a soft landing without oversteering." Rate cuts may continue-but gradually, and only if the data allows, she says. - Emese Bartha

ECB Rate Hike in 2026 Seen Very Unlikely

An interest-rate increase by the European Central Bank in 2026 looks very unlikely, Edmond de Rothschild Asset Management's Benjamin Melman says in a webinar. "We don't believe it is going to happen," he says. It would be "madness" to raise rates so soon, particularly with Germany starting a large-scale fiscal expansion program after years of a sluggish economic performance and with France's fiscal struggles, he says. Money markets aren't pricing any ECB rate hikes for 2026, according to LSEG. - Emese Bartha

Basis Points The U.S. invented the most powerful artificial-intelligence models and controls access to the most advanced computer chips, but China has an ace to play in the global AI contest. U.S. investors are plowing money into Chinese companies involved in artificial intelligence , despite growing competition between Washington and Beijing over the technology. China's top leaders pledged to prioritize supporting domestic demand

in their policy road map for 2026, vowing to continue to support consumers as heightened external uncertainties seem set to persist. China's Commerce Ministry urged Mexico to rectify "unilateral, protectionist practices"

as soon as possible, saying that tariffs announced by the Latin American country harm Chinese interests. The U.K. residential market remains subdued

following the government's autumn budget last month, with no near-term improvement seen, according to a new report. The oil market's projected surplus has narrowed due to lower OPEC+ production , but a large supply overhang continues to cloud the outlook, the International Energy Agency said in its monthly report. The U.S. seized an oil tanker off the coast of Venezuela, President Trump said Wednesday, marking a major escalation

in the administration's pressure campaign against the country's leader, Nicolás Maduro. About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to [[e-mail]].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

12-11-25 0720ET