Weekly Update
December 1, 2025
Upcoming Events
Monday, December 1
Divisia Release
Powell Speaks at Hoover Institution Event
Tuesday, December 2
Bowman Testifies before U.S. House Financial Services Committee
Thursday, December 4
Bowman Speaks at Florida Bankers Association Leadership Luncheon
Friday, December 5
Personal Consumption Expenditures Price Index Release
Surveys of Consumers Release
Recent News
Last words… Federal Reserve officials entered the blackout period on Saturday, ahead of next week’s Federal Open Market Committee meeting. Here’s what they were saying before then:
The current policy stance is still somewhat restrictive, but we have moved it closer to its neutral level that neither restricts nor stimulates the economy. The evolving balance of risks underscores the need to proceed slowly as we approach the neutral rate.
[…]
With respect to the path of the policy rate going forward, I will continue to determine policy based on the incoming data, the evolving outlook, and the balance of risks. I always take a meeting-by-meeting approach. This is an especially prudent approach at this time.
With underlying inflation close to the FOMC’s target and evidence of a weak labor market, I support cutting the Committee’s policy rate by another 25 basis points at our December meeting. For reasons I have explained, I am not worried about inflation accelerating or inflation expectations rising significantly. […] I worry that restrictive monetary policy is weighing on the economy, especially about how it is affecting lower-and middle-income consumers. A December cut will provide additional insurance against an acceleration in the weakening of the labor market and move policy toward a more neutral setting.
We are at a moment when risks to both sides of the dual mandate are elevated. Keeping rates too high increases the likelihood that the labor market will deteriorate sharply. Lowering rates too much would increase the likelihood that inflation expectations will become unanchored. As always, I determine my monetary policy stance each meeting based on the incoming data from a wide variety of sources, the evolution of my outlook, and the balance of risks. Every meeting, including December’s, is a live meeting.
Looking ahead, it is imperative to restore inflation to our 2 percent longer-run goal on a sustained basis. It is equally important to do so without creating undue risks to our maximum employment goal. I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions. Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals.
— Pres. John Williams (New York)
Overall financial conditions are a bit of a tailwind, not a headwind. That’s an environment where, for me, it doesn’t suggest an urgency to be more accommodative in monetary policy.
— Pres. Susan Collins (Boston)
In my view, this underlying the economy is pretty strong and I feel like eventually we are going to be back to, rates can come down a fair amount, but in the near term I’m a little uneasy front loading too many rate cuts, and counting on (that) this will be transitory and inflation will go back down.
— Pres. Austan Goolsbee (Chicago)
Going forward, I think we need to proceed—and tread with caution—because I think there is limited room for further easing without monetary policy becoming overly accommodative. Remember: inflation is still at 3 percent. And I believe policy right now is somewhere between modestly restrictive and neutral. It’s probably getting closer to neutral than to modestly restrictive. One way to think about this is […] the real interest rate is running around 1 percent. 1 percent happens to be the real interest rate that the median of the committee believes is the longterm neutral rate of the economy. So I believe we need to continue to lean against above-target inflation while providing some support to the labor market.
— Pres. Alberto Muslim (St. Louis)
On deck… Last week, Treasury Secretary Scott Bessent said President Trump could announce his nominee to replace Chair Jerome Powell in the next few weeks:
I think there’s a very good chance that the president will make an announcement before Christmas. But it’s his prerogative, whether it’s before the Christmas holidays or in the new year. But I think things are moving along very well.
Bessent said five candidates remained under consideration, as the second round of interviews was concluding last week. He did not say who the five candidates were. Frontrunners on Polymarket include Kevin Hassett (60%), Christopher Waller (20%), Kevin Warsh (12%), Rick Reider (3%), and Scott Bessent (2%).