The difficulty of Federal Reserve communication has increased, with supplementary data following immediately after the interest rate decision meeting

On December 10, although the anticipated rate cut by the Federal Reserve is widely seen as accompanied by hawkish guidance, the subsequent data releases after the meeting may quickly render its economic and interest rate forecasts outdated, and it is reasonable for the market to remain skeptical of any signals. The Federal Reserve is expected to implement a rate cut in the early hours of Thursday Beijing time. Policymakers must address the economic data gap caused by the recent government shutdown and also engage in a debate about the risks facing the economy, with differing opinions among various parties. Considering the internal divisions among policymakers — some skeptical about the need for further rate cuts given that inflation remains high; others believing that without lowering borrowing costs, the economy and employment market could weaken — this anticipated rate cut may be accompanied by ambiguous statements regarding the interest rate path for next year, possibly leaning hawkish. The new quarterly economic forecast summary released alongside the latest rate decision will display Federal Reserve officials’ expectations for the economy in 2026 and their views on an appropriate interest rate path. However, these forecasts for the coming year are often quickly outdated by subsequent data releases and provide limited guidance on the pace of policy actions.