Mitsubishi UFJ: The Federal Reserve's policy in the second half of next year will become more complicated due to leadership changes

Deep Tide TechFlow News, December 11th, according to Jintiao Data, Mitsubishi UFJ stated that the Federal Reserve lowered interest rates by 25 basis points with a 9-3 voting result and acknowledged that the labor market is gradually cooling down. Powell also emphasized the significant downside risks faced by the labor market. Regarding inflation, the Fed pointed out that if no new tariffs are imposed, commodity inflation may peak in the first quarter of 2026, but the risk of persistent inflation remains. Powell signaled that rate hikes are not the baseline expectation, and FOMC members are divided between maintaining rates and cutting rates. The latest median dot plot indicates that the Federal Reserve will only cut rates once in 2026, a more hawkish stance compared to the market expectation of about 55 basis points (or slightly more than two rate cuts). Powell also emphasized that the Federal Reserve is currently “in a favorable position” to patiently observe the development of the US economy. Looking ahead, policy prospects in the second half of next year may become more complicated due to changes in the Federal Reserve leadership, increasing market uncertainty.