Fed Update | December 2025 FOMC (Video)
- Edward von der Schmidt
- Dec 21, 2025
- 2 min read
Updated: Jan 16
Transcript
Hi everyone.
I just posted a macro update about the December Fed meeting and I wanted to speak to a few key points.
The first is that the Fed is signaling a pause. It does not intend to cut rates again in January. The statement stressed that they are “considering the extent and timing of additional adjustments" to policy, which means that they are not planning another move at this time. Obviously, the narrative can change in a hurry as data comes in.
Secondly, weaker labor markets are gaining prominence relative to tariff driven inflation concerns, which the Fed expects to be temporary. They're just worried about how temporary, and they don't want a repeat of the pandemic experience. Almost everyone on the Fed agrees with where things are, which is to say weaker labor markets and inflation that's still too high.
The active debate on the committee concerns where the greater risks lie, and what should be done about them and when. They need more time to assess and establish consensus, hence the pause.
Because the Fed’s mandated goals of price stability and maximum employment are in conflict or tension, as Powell would say, they need more time to see how the economy plays out before deciding to lower rates again.
They want to be sure that inflation won't be a lasting problem before stepping in to support labor markets with lower rates.
There are also limits as to what monetary policy can do. It can’t address societal changes arising from AI or fix structural housing shortages.
Given these factors and with policy rates at near neutral, if you're expecting a lot of Fed easing in the near term, you may be disappointed.
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