Articles

• Powell signals neutral policy stance as non tariff driven inflation fades
• Fed Powell:Layoffs, hiring remain low. Rates are now in a plausible range of neutral.
• The line-by-line comparison of the October and the December FOMC statements
• The Federal Reserve cuts rates by 25 basis points to 3.50% to 3.75%
• White House economic advisor Hassett: Fed has plenty of room to cut rates
• BOC Macklem: Markets can count on us taking decisions one at a time
• Crude oil inventories see a drawdown at -1.812 million versus -2.310 million estimate
• A line by line comparison of the October and December BOC statements.
• BOC Macklem: Given the current balance of risks, the policy rate is at the right level
• The Bank of Canada keeps rates unchanged at 2.25% at the December 2025 meeting.
• US employment cost index for Q3 0.8% versus 0.9% estimate
• investingLive European FX news wrap: Final countdown to the last Fed decision of 2025

The Federal Reserve cut rates by 25 basis points as expected to 3.5% to 3.75%. The also announced that they would be purchasing bills in what traders and analysts are calling a mini-QE. The cut was expected to be a hawkish cut. It was more neutral in that the Fed chair emphasized that the Fed is “well-positioned”.

The vote split came in at 9–3, with Fed Governors Goolsbee and Schmid dissenting in favor of keeping rates unchanged. Meanwhile, Governor Miran dissented in the opposite direction, calling for a 50-basis-point cut.

The dot plot shows that four additional Fed presidents preferred to hold rates steady, suggesting a larger bloc of hawkish resistance underneath the headline decision. While the full list of dissenters isn’t yet confirmed, it’s highly likely that Dallas Fed President Logan and Cleveland Fed President Hammack were among them—both are well-known inflation hawks and will serve on the FOMC in 2026.

The identities of the remaining two “hold” voters are still unclear, but based on the composition of the upcoming rotation, it is safe to conclude that Goolsbee and Schmid will be replaced next year by presidents who leaned toward keeping rates unchanged. That shift could be more hawkish (depending on the other two) or unchanged in 2026.

We should expect to hear more from those hawkish members in the next day or two as they explain their stance and begin shaping the narrative around the Fed’s evolving policy bias.

Looking at the projections for end of year GDP, Unemployment rate and PCE inflation (headline and core) showed:

• GDP projected higher to 2.3% from 1.8%
• Unemployment projected unchanged at 4.4%
• PCE inflation projected lower at 2.4% from 2.6%
• PCE Core projected lower at 2.5% vs 2.6%
• The year end Fed Funds target projected unchanged at 3.4%

Key Takeaways from the Powell press conference comments.

During Powell’s press conference, key takeaways were:

• Powell signaled that policy is now in the plausible range of neutral, with no preset path and decisions remaining data dependent.

• The labor market is softening gradually, with rising downside risks to employment but no signs of a sharp downturn.

• Inflation remains somewhat elevated, driven largely by tariffs, while services disinflation continues.

• Consumer spending is resilient, and AI-related business investment remains strong.

• Powell emphasized the Fed is well-positioned to wait for more data before deciding on January policy moves.

In Summary

Chair Powell framed today’s decision as part of a careful shift toward neutral policy, stressing that the Fed has no preset path and will continue to evaluate incoming data “meeting by meeting.” He noted that the labor market has softened—job gains have slowed, unemployment has edged higher, and labor demand has cooled—but he does not foresee a sharp deterioration, even as downside risks to employment have increased. On inflation, Powell said overall price pressures remain somewhat elevated, with goods inflation now entirely driven by tariffs while services disinflation continues. He also cautioned that recent shutdown-distorted inflation and labor data will require careful interpretation.

Powell highlighted that consumer spending remains solid and that business investment, especially in AI data-center capacity, continues to expand. Housing remains weak, and a quarter-point rate cut would do little to improve affordability given long-standing supply constraints. Looking ahead, Powell said the Fed is well-positioned to wait for a substantial amount of new data before the January meeting, adding that the Committee broadly supported today’s decision and remains focused on guiding inflation back to 2% while avoiding unnecessary damage to the labor market.

The markets were encouraged by the Fed chair comments and the decision from the Fed.

US stocks did move lower on the comment that the rate was now near neutral, but reversed higher as the fear of inflation seemed less a concern (with growth continuing).

• Dow industrial average rose 497.46 point or 1.05% to 48057.75. The all-time record high close reached on November 12 was at 48254.82.
• S&P index rose 46.17 points or 0.67% to 6886.68. That is just short of its record high reached on October 29 at 6890.59.
• NASDAQ index rose and 77.67 points or 0.33% at 23654.16. Its all-time high close reached on October 29 is at 23958.47.
• Russell 2000 rose 33.36 points or 1.32% at 2559.60. The index closed at a new record high.

Yields were encouraged by the comments:

• 2-year yield 3.538%, -7.5 basis points. The 2-year yield is now within the Fed funds target rate between 3.5% and 3.75%.
• 5 year yield 3.730%, -4.9 basis points
• 10 year yield 4.150%, -3.5 basis points
• 30 year yield 4.795%, -1.3 basis points.

The USD moved lower after the decision. The declines of the greenback vs the major currencies showed:

• EUR, -0.58%
• JPY -0.58%
• GBP -0.65%
• CHF -0.78%
• CAD -0.35%
• AUD -0.57%
• NZD -0.61%

This article was written by Greg Michalowski at investinglive.com.

The Federal Reserve cut rates by 25 basis points as expected.

The full statement from the Fed.

December 10, 2025

Federal Reserve issues FOMC statement

For release at 2:00 p.m. EST

Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.

In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3‑3/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting; and Austan D. Goolsbee and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.

The table of Fed projections shows:

Of significance from the projections for end of 2026:

• GDP higher to 2.3% from 1.8%
• Unemployment unchanged at 4.4%
• PCE inflation lower at 2.4% from 2.6%
• PCE Core lower 2.5% vs 2.6%
• The year end Fed Funds target group is unchanged at 3.4%

The chance of a cut was around 90%.

Just before the decision:

• Dow was up 0.34%
• S&P was unchanged
• Nasdaq was down -0.38%

Overall,

• The vote was more dovish with only 2 voting for no change. There was not a doubt on the vote.
• The Fed did say they will buy shorter-term bills. A mini-QE? Dovish.
• The dot plot did indicate that 4 additional non-voting members would have voted to keep rates unchanged. 13 did vote for a cut.

This article was written by Greg Michalowski at investinglive.com.

Speaking on Fox News:

• Fed has plenty of room to cut rates.
• Probably will need to do some more.
• Data could support 50 basis point cut
• You could definitely get to 50 or even more.
• The president will make his decision on Fed chair in a week or so.
• He is honored to be a candidate for the role.

Yesterday, Hassett struck a more Powell-like tone, emphasizing that monetary policy remains data dependent. By contrast, Fed Governor Miran and Treasury Secretary Bessent have leaned more openly toward pre-emptive rate cuts, arguing that slower growth and rising labor-market risks in the first quarter warrant earlier action. Both Miran and Bessent have also expressed confidence that inflation will decline sharply in 2026, reinforcing their case for easing sooner rather than later – and not so data dependent NOW.

Unfortunately, the key economic data—including employment and inflation—won’t be released until next week, leaving the market without the confirmation it needs. Those reports could easily swing expectations in either direction, especially if inflation comes in hotter or the labor market proves stronger than anticipated.

Meanwhile, the race for the next Fed Chair is accelerating. Kevin Hassett remains a leading contender for the role that opens in 2026, and President Trump is now interviewing finalists. Reports indicate that Kevin Warsh received the first interview, signaling he may be gaining traction.

Prediction markets reflect the shifting momentum. On Polymarket, Hassett’s odds have fallen from 88% last week to about 70%, while Warsh has climbed to 14%, and Fed Governor Christopher Waller has inched up to around 6%.

This article was written by Greg Michalowski at investinglive.com.

Key Data Summary (Actual vs. Estimate vs. Prior)

• Crude Stock: -1.812M vs -2.310M est. (Prior +0.574M)

• Distillate Stock: +2.502M vs +1.943M est. (Prior +2.059M)

• Gasoline Stock: +6.397M vs +2.764M est. (Prior +4.518M)

• Crude Imports: +0.212M vs Prior -0.470M (no estimate)

• Refinery Utilization: +0.4% vs 0.3% est. (Prior +1.8%)

• Crude Cushing Stocks: +0.308M vs Prior -0.457M (no estimate)

Market Summary — Inventories vs. Expectations

This week’s EIA report showed a smaller-than-expected crude draw but the drawdown was less than the private data released late yesterday.

The major standout in the report today was higher than expected gasoline and distillate builds, both of which came in sharply above forecasts — a bearish signal for refined product demand. The private data also showed a gasoline in distillate build.

Crude imports flipped from a decline to a rise, refinery utilization ticked higher, and Cushing stocks increased modestly — all reinforcing a theme of supply increasing faster than demand this week.

The private data released late yesterday showed:

• Crude -4800K
• Prior was +2480K
• Gasoline +7000K
• Distillates +1000K

The price of crude oil is trading down $0.42 or -0.72% at $57.83.

This article was written by Greg Michalowski at investinglive.com.

5 key bullet points:

• BoC held the policy rate at 2.25%, judging it appropriate to keep inflation near 2% during a period of structural trade adjustment.

• US tariffs are hitting key sectors, but the overall Canadian economy remains more resilient than expected.

• CPI inflation stays contained near 2%, with core around 2½–3%, and temporary near-term volatility expected.

• Labour market shows modest improvement, though hiring intentions and trade-sensitive sectors remain weak.

• Elevated uncertainty—especially US trade policy and CUSMA review—means the BoC is prepared to respond if the outlook shifts.

Summary of Tiff Macklem’s Comments

• Policy rate held at 2.25%, with Governing Council judging it as appropriate to keep inflation near 2% while supporting the economy through a structural adjustment caused by US trade conflict.

• Three core messages:

  • Severe US tariffs have hit key Canadian sectors (autos, steel, aluminum, lumber), but the overall economy remains more resilient than expected.

  • Inflation pressures remain contained, with CPI near 2% for over a year and core measures in the 2½–3% range.

  • Given the current balance of risks, the policy rate is at the right level, though uncertainty is unusually high and the Bank is ready to respond if the outlook shifts.

• Revised GDP data show the economy entered 2025 healthier than previously thought, with stronger demand and capacity prior to the trade shock—helping explain current resilience.

• Recent economic performance is mixed: Q3 GDP surged 2.6% due to volatile trade, but final domestic demand was flat, and Q4 GDP is expected to be weak before growth improves in 2026.

• Labour market showing improvement, with three months of job gains and a drop in unemployment to 6.5%, though trade-sensitive sectors remain fragile and hiring intentions across the economy are soft.

• Inflation evolving largely as expected; headline CPI at 2.2%, with temporary volatility ahead due to last year’s GST/HST holiday. Underlying inflation remains around 2½%-3%, and economic slack should help keep CPI near target.

• Fiscal policy will add some support, with higher defence spending and investment incentives contributing to growth over time. Updated fiscal impacts will be incorporated into the January projection.

• Governing Council views the policy rate near the lower end of neutral as appropriate: accommodative enough to support adjustment, but consistent with containing inflation.

• Uncertainty remains elevated, especially around US trade policy and the upcoming CUSMA review, making it harder to judge underlying economic momentum due to volatility in trade flows and GDP.

• Macklem emphasized that Canada faces a structural transition, not just a cyclical slowdown. Trade frictions reduce economic efficiency and income, and monetary policy cannot restore lost supply, but it can help the economy adjust as long as inflation stays anchored near 2%.

The full opening statement from Macklem.

Opening statement

Tiff Macklem

Ottawa, Ontario

December 10, 2025

Good morning. I’m pleased to be here with Senior Deputy Governor Carolyn Rogers to discuss today’s monetary policy decision.

Today, Governing Council maintained the policy interest rate at 2.25%.

We have three main messages.

First, steep US tariffs on steel, aluminum, autos and lumber have hit these sectors hard, and uncertainty about US trade policy is weighing on business investment more broadly. But so far, the economy is proving resilient overall.

Second, inflationary pressures continue to be contained despite added costs related to the reconfiguration of trade. Total CPI inflation has been close to the 2% target for more than a year now, and we expect it to remain near the target.

Third, in the current situation, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. Nevertheless, uncertainty remains high and the range of possible outcomes is wider than usual. If the outlook changes, we are prepared to respond.

Let me expand on how we’re interpreting the new information we received since we published our October Monetary Policy Report.

In November, Statistics Canada published broad revisions to Canada’s economic growth numbers for 2022, 2023 and 2024. The revisions suggest the Canadian economy was healthier than we previously thought before we were hit by the US trade conflict. In particular, they suggest both demand and economic capacity were higher coming into this year. This may explain some of the resilience we’re seeing in more recent data.

After falling 1.8% in the second quarter due to sharply lower exports, Canadian GDP grew 2.6% in the third quarter. This was much stronger than we expected, but largely reflected volatility in trade. Final domestic demand was flat in the quarter. We expect growth in final domestic demand to resume, but with an anticipated decline in net exports, GDP growth is likely to be weak in the fourth quarter before picking up in 2026.

The labour market is showing some signs of improvement. After declining through the summer, employment has posted solid gains for the past three months and the unemployment rate has declined to 6.5% in November. Since the start of the year, there have been significant job losses in trade-sensitive sectors. But in recent months, employment in these sectors has been more stable, so gains in other sectors—particularly services—have boosted overall employment. Looking ahead, however, we’re seeing muted hiring intentions across the economy.

Inflation has evolved largely as expected. CPI inflation was 2.2% in October, and measures of core inflation remained in the range of 2½% to 3%. In the months ahead, we will see some choppiness in headline inflation, reflecting the temporary GST/HST holiday on some goods and services a year ago. This is likely to push inflation temporarily higher in the near term. Seeing through this choppiness, we expect ongoing economic slack to roughly offset cost pressures associated with the reconfiguration of trade, keeping CPI inflation close to the 2% target.

The recent federal budget includes increases in government spending, particularly in defence, and measures to increase public and private sector investment. It will take some time for the impact of these measures to be fully realized, and we expect they will contribute to growth in both demand and supply in the economy. As usual, we will incorporate updated fiscal measures from federal and provincial budgets in our next economic projection in January.

Taking all these developments into consideration, Governing Council assessed the stance of monetary policy. After cutting the policy interest rate in September and October, Governing Council had indicated that if inflation and economic activity were to evolve broadly in line with the October projection, the policy rate would be about right. While information since the last decision has affected the near-term dynamics of GDP growth, it has not changed our view that GDP will expand at a moderate pace in 2026 and inflation will remain close to target. Governing Council therefore decided to hold the policy rate unchanged. We agreed that a policy rate at the lower end of the neutral range was appropriate to provide some support for the economy as it works through this structural transition while keeping inflationary pressures contained.

Finally, Governing Council acknowledged that uncertainty remains elevated. This includes the unpredictability of US trade policy. In particular, the upcoming review of the Canada-United States-Mexico Agreement is creating uncertainty for many businesses. There is also uncertainty about how the Canadian economy will adjust to higher tariffs. The volatility we’re seeing in trade and quarterly GDP make it more difficult to assess the underlying momentum of the economy.

We will be assessing incoming data relative to our outlook. If a new shock or an accumulation of evidence materially change the outlook, we are prepared to respond.

Increased trade friction with the United States means our economy works less efficiently, with higher costs and less income. This is more than a cyclical downturn—it’s a structural transition. Monetary policy cannot restore lost supply. But it can help the economy adjust as long as inflation is well controlled. The Bank of Canada is focused on ensuring Canadians continue to have confidence in price stability through this period of global upheaval.

This article was written by Greg Michalowski at investinglive.com.

• Prior quarter of 0.9%
• Employment cost index 0.8% versus 0.9% estimate.
• Employment benefits 0.8% versus 0.7% prior quarter
• Wages 0.8% versus 1.0% per quarter

YoY data shows:

• Civilian worker compensation: +3.5%

  • Wages & salaries: +3.5%

  • Benefits: +3.5%

• Private industry compensation: +3.5%

  • Wages & salaries: +3.6%

  • Benefits: +3.5%

  • Real (inflation-adjusted) wages: +0.6%

• State & local government compensation: +3.6%

  • Wages & salaries: +3.5%

  • Benefits: +3.8%

  • Real (inflation-adjusted) wages: +0.5%

Employment costs continued to rise steadily in the third quarter of 2025, with civilian compensation increasing 0.8% from June to September and up 3.5% over the past year. Wages, salaries, and benefits each rose at the same 0.8% quarterly pace. Year-over-year, compensation growth held at 3.5% for both civilian and private-sector workers, with private-sector wages up 3.6% and real wages improving modestly by 0.6%. State and local government compensation increased 3.6% over the year, supported by a 3.8% rise in benefits and a 0.5% gain in real wages. This release was delayed more than five weeks due to the federal government shutdown, which reduced survey response rates. The next ECI report, covering the December 2025 period, will be released on February 10, 2026.

The good news is the YoY Employment numbers are keeping ahead of the CPI inflation which is around 3.0%. So real wages are higher.

This article was written by Greg Michalowski at investinglive.com.

• Fed preview: a “hawkish cut” is expected but here’s what could surprise the market
• FX option expiries for 10 December 10am New York cut
• ECB’s Villeroy: the wise thing would be to maintain ECB rates at current level
• ECB’s Simkus: rates can probably stay at 2% at further meetings
• BoC preview: the central bank is unlikely to validate the rate hike bets just yet
• What are the main events for today?

It’s been a very boring session with no data or notable news releases. In the markets, it’s been the same with rangebound price action almost across the board. But that shouldn’t be surprising because we are counting the hours to the last FOMC decision of the year.

Before the Fed, we will have the Bank of Canada delivering its rate decision where the central bank is expected to keep interest rates unchanged but not validating the rate hike bets just yet.

Given the incoming Fed’s decision, the BoC event is unlikely to bring too much volatility unless the central bank clearly pushes back against market pricing or opens the door for rate hikes already at this meeting.

The Fed, on the other hand, is widely expected to deliver a “hawkish” 25 bps cut bringing the FFR to 3-50-3.75%. The overall tone is expected to be more hawkish with clear signal of a pause and the bar for further cuts being higher.

We will also get new Summary of Economic Projections (SEP) and the Dot Plot at this meeting, although little changes are expected. The focus will be on potential surprises and especially on the Press Conference where Fed Chair Powell will have to strike a balance between sounding too hawkish or too dovish.

Wish you all a successful trading day. Don’t bet without conviction and keep your risk management in check. Will catch you tomorrow!

This article was written by Giuseppe Dellamotta at investinglive.com.

• China November CPI +0.7% vs +0.7% expected
• China likely to cut RRR rate next year – report
• Japan PM Takaichi asked about rising yields, says closely watching market moves
• Zelensky signals Ukaine’s answer to Trumps peace plan will come Wednesday
• Trump: I hear that autopen might have signed the appointments of Fed board governors
• Japan November corporate goods prices index +2.7% vs +2.7% expected
• Japanese Reuters Tankan December manufacturing +10 vs +17 prior
• Trump to kick off final Fed interviews this week: Hassett remains in poll position
• Trump says he will be meeting with “a couple” people for the Fed chair job
• New Zealand October migration +2400

Markets:

• Gold down $3 to $4206
• US 10-year yields down 0.4 bps to 4.18%
• WTI crude up 7 cents to $58.32
• S&P 500 futures flat
• JPY leads, NZD lags

There wasn’t much in terms of market moves to start the day. The main one was silver hitting a fresh record high above $61 but it was fleeting move and it’s now given back most of the gains. What got some of the market’s attention was Trump talking about Biden using autopen to appoint Fed Governors. That’s being taken as a joke and it should be noted that they’re approved by Congress so it’s hardly like undoing an executive order. In any case, it’s another example of how badly Trump wants lower rates.

In China, the CPI headline was in-line but the m/m reading was soft and so was PPI. That’s couple with fresh stimulus talk in China and a report about an RRR cut. It all tees up an interesting 2026 as some recent profit taking has hit Chinese stock markets.

Looking ahead, it’s Fed day but we will also look out for Zelensky’s response to Trump’s peace plan. Optimism is low but you never know.

This article was written by Adam Button at investinglive.com.

Oil prices have been struggling in part due to hopes for peace. Indications from Trump and Russia were that sanctions relief would come with any deal and that would allow Russian crude to flow more freely.

As for the chances of a deal, they’re low but peace after a long war always seems impossible until it does. These things often tend to move quickly and Trump certainly has ways to lean on Ukraine to give up a large part of its territory forever. On the ground, Russia is inching ahead but Ukraine has little capability to mount any kind of counter-attack. They’re having some success on raising the economic toll on Russia but that’s a tough way to win a war against a country that’s seen surprisingly strong economic growth since the outset of the conflict.

This article was written by Adam Button at investinglive.com.

• Important for currencies to move in stable manner, reflective fundamentals
• Will take appropriate action of excessive, disorderly moves

At what point does some serious worry hit the Japanese debt market? It’s no fun losing money on 10-year notes day after day.

This article was written by Adam Button at investinglive.com.

• Prior was +0.2%
• m/m CPI -0.1% vs +0.2% exp
• PPI -2.2% vs -2.0% y/y

This is a step in the right direction but the PPI still shows falling prices and the m/m CPI.

This article was written by Adam Button at investinglive.com.

Trump may be looking to stack the Fed.

If Trump goes down this path it would be bearish for the US dollar and wildly bullish for precious metals and hard assets. The long end would hate it and there would be a big steepener.

Biden appointed:

• Jefferson
• Barr
• Cook
• Kugler

Kugler has already resigned and been replaced by Miran.

If Trump were to replace the other three and the chair, he would have enough votes to do whatever he wanted, presuming that Waller, Bowman and Miran continued to back his agenda. It would be the end of Fed independence.

I don’t think the market will take this too seriously but this is floating a major shakeup to monetary policy and it would be an atomic bomb.

Talk like this might lead Powell to stay on as a Governor when his term expires.

This article was written by Adam Button at investinglive.com.