Reuters World News The Fed cuts rates - and signals a pause
Dec 10, 2025
Howard Schneider, a veteran Reuters economics reporter, sheds light on the divided Federal Reserve's struggle with outdated data and potential leadership changes. He discusses how stimulus and AI could reshape labor markets. Joining him, Mike Dolan shares insights on market reactions to central bank decisions and the unease surrounding easing cycles. Meanwhile, tensions rise as Japan intercepts Russian and Chinese air patrols, and Lithuania grapples with a bizarre balloon crisis involving cigarette smuggling from Belarus.
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Fed Faces Uncertain Outlook With Leadership Change
- The Fed faces a split because leadership turnover and sparse data make next-year projections highly uncertain.
- Policymakers must weigh risks of higher unemployment versus persistent 2.8% inflation when choosing cuts.
AI Investment Muddies Labor Market Picture
- Massive AI investment could shift labor demand and thus influence monetary policy decisions.
- The net employment effect is unclear and complicates Fed judgments about easing.
Focus On Fed Guidance, Not Just Today's Cut
- Watch Fed guidance on the pace of future cuts, not just today's quarter-point move.
- Track bond-market signals for expectations of when central banks might begin raising rates again.