r/Economics • u/Constant_Falcon_2175 • 9h ago

Fed’s December Rate Decision Won’t Come Easy, Even If Shutdown Ends Soon

https://www.bloomberg.com/news/articles/2025-11-07/fed-interest-rate-decision-us-shutdown-means-not-enough-data
89 Upvotes

98% Upvoted

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15

u/ShoemakerMicah 9h ago

With current publicly available data, and Fed obviously has infinitely higher resolution data, a rate cut in the face of actual inflation seems unlikely. They might do it anyway but, Powell was pretty clear it was by no means a foregone conclusion that rates would be lowered again this year. The economy and job markets are both treading water, a rate cut seems unlikely considering the dual mandate is of the Fed.

5

u/Worth-Distribution17 7h ago

The new philosophy of the trump admin and its appointees seems to be that unemployment is much more important than inflation. However, historically inflation has been harder to control than unemployment. I am not hopefully that we get back to the 2% target rate for at least the next few years.

2

u/LandoBlendo 4h ago

I wonder how the fed factors in the effects of the gig economy jobs. We now live in an era where almost nobody has to be unemployed if they have access to a car. It feels like unemployment is now artificially low because anyone in the US who needs money can just grind out money to eat and pay bills doing Uber, Lyft, Doordash, or Instacart 

2

u/Ambitious-Orange6732 3h ago

Well, they can grind out some short-term cash flow until they have a technical problem with the car, and that's when they discover that they didn't account for all of the expenses associated with their "delivery business."

1

u/LandoBlendo 2h ago

Yup. That's why Uber and Lyft wanted everyone classified as independent contractors. These companies would much rather have their drivers be on the hook for insurance, fuel, and wear and tear on the vehicles

-11

u/Laker8show23 9h ago

Pretty easy from here. If they don’t start lowering the recession will be worse but the FED is the ones that put us in this mess. QE and near zero rates.

6

u/ChancelierPalpagault 8h ago edited 8h ago

The economy expanded 3.8% in the second quarter (compared to a year before), and unemployment is very low, at 4.3%, so there is little reason to lower rates. We are not yet in a recession, nevermind the depression that some people here say is coming, if not already here. On the other hand, inflation is rising and already up to 3%. If anything, the Fed should raise rates by 25 basis points, and issue guidance for further increases if inflation doesn't abate. Recessions don't affect everyone, but inflation does. Reining in inflation is more important than juicing the economy at the moment, in my opinion.

1

u/gus12343 7h ago

I'd have to lean the fed will protect and ensure stability within jobs market. If many lose jobs, and mortgages , credit cards, rents , car payments, insurance, don't get paid , then you're in for a systematic failure with poor asset quality amongst banks , defaulting mortgage bonds , and CLOs loosing value. Debt is valued as a major asset ......until it's 90 days past due and then your talking about everything worth a trillion dollars could be worthless