Weekly Update
December 15, 2025
Upcoming Events
Monday, December 15
Miran Speaks at Columbia University Event
Williams Speaks at New Jersey Bankers Association Event
Tuesday, December 16
Industrial Production and Capacity Utilization Release
Jobs Report Release
Wednesday, December 17
Waller Speaks at Yale University CEO Summit
Williams Speaks at FX Market Structure Conference
Thursday, December 18
Consumer Price Index Release
Friday, December 19
Surveys of Consumers Update
Recent News
Down, with dissents… The Federal Open Market Committee (FOMC) reduced its federal funds rate target by 25 basis points last week. The new target range is 3.5 to 3.75 percent, which is more-or-less in line with leading monetary policy rules.
Three FOMC members dissented from the decision. Gov. Stephen Miran preferred a 50 basis point cut. Regional Reserve Bank Presidents Austan Goolsbee (Chicago) and Jeffrey Schmid (Kansas City) preferred leaving the target range unchanged.
At the post-meeting press conference, Federal Reserve Chair Jerome Powell described a “challenging situation” where “risks to inflation are tilted to the upside and risks to employment to the downside.”
There is no risk-free path for policy as we navigate this tension between our employment and inflation goals.
A reasonable base case is that the effects of tariffs on inflation will be relatively short-lived, effectively a one-time shift in the price level. Our obligation is to make sure that a one-time increase in the price level does not become an ongoing inflation problem. But with downside risks to employment having risen in recent months, the balance of risks has shifted.
Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate. Accordingly, we judged it appropriate at this meeting to lower our policy rate by a quarter percentage point. […] This further normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2 percent once the effects of tariffs have passed through.
Powell said cutting the federal funds rate target by 75 basis points over the last three meetings has put it “within a range of plausible estimates of neutral” and has left the FOMC “well-positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.”
Looking ahead… FOMC members also submitted new projections for inflation, production, and unemployment.
The median FOMC member now expects the Personal Consumption Expenditures Price Index will grow only 2.9 percent in 2025, compared with 3.0 percent projected back in September. The median member now projects 2.4 percent PCEPI inflation in 2026 (down from 2.6 percent) and 2.1 percent PCEPI inflation in 2027 (unchanged).
The median FOMC member revised up their projection for real Gross Domestic Product growth. They now expect 1.7 percent real GDP growth this year, compared with 1.6 percent projected back in September. The median member now projects 2.3 percent real GDP growth in 2026 (up from 1.8 percent) and 2.0 percent real GDP growth in 2027 (up from 1.9 percent).
The median FOMC member continues to expect 4.5 percent unemployment in 2025 and 4.4 percent unemployment in 2026. The median member now projects 4.2 percent unemployment for 2027, down from 4.3 percent in September.
JOLTS… The number of job openings was unchanged in August 2025, the Bureau of Labor Statistics reported last week. There were 7.7 million openings on the last business day of the month. Job openings were up slightly year-over-year. There were 7.6 million job openings on the last business day of October 2024.
According to the BLS, there were 5.1 million hires in October 2025, unchanged from the prior month. There were also 5.1 million separations, down from 5.3 million in the prior month.
Within separations, there were 2.9 million quits in October 2025 (down from 3.1 million in the prior month) and 1.9 million layoffs and discharges (up from 1.8 million in the prior month).