The Breakdown The Fed Is Fracturing
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Dec 12, 2025 A deep dive into a contentious meeting reveals a divided Fed delivering a significant rate cut. The discussion highlights competing inflation and labor-market risks. Powell admits the Fed is 'flying blind' without fresh data, relying on alternative datasets. Notably, the end of quantitative tightening and new reserve management purchases spark debate over whether it's truly quantitative easing. With a fractured dot plot and shifting consumer behavior, this hawkish cut raises questions about market implications as uncertainty looms for 2026.
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Fed Vote Reveals Deep Division
- The Fed delivered a contentious rate cut with multiple dissents signaling a fractured committee.
- Several regional presidents and three FOMC members publicly opposed the move, highlighting deep policy disagreement.
Dot Plot Shows Wide Policy Split
- The dot plot showed a wide dispersion of rate projections, from multiple hikes to several cuts.
- Powell admitted uncertainty and said he could make a case for either further cuts or holding steady.
Fed Is Flying Blind Without BLS Data
- The Fed lacks recent BLS jobs and inflation data, forcing reliance on private alternative indicators.
- Powell and private data suggest the labor market has cooled more than headline payrolls indicate.