Notes on the Week Ahead Forecasting the Fed’s Forecasts
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Dec 8, 2025 Get ready for a deep dive into the Federal Reserve's upcoming FOMC meeting! Listen in as market expectations shift dramatically around a potential December rate cut. Discover the intriguing dynamics within the Fed, including mixed signals on labor data and the complex unemployment outlook. David Kelly breaks down inflation trends and growth forecasts, leading to predictions about future monetary policy. Plus, find out what a hawkish surprise might mean for investors. Don’t miss this comprehensive analysis of pivotal economic factors!
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Division Driven By Forecasts Not Politics
- Fed members are divided because their economic forecasts differ more than politics does.
- Market odds swung wildly as participants parsed Fed speeches for forecast signals.
Markets React Sharply To Fed Language
- A single senior Fed speech shifted market odds dramatically in late November.
- Market pricing remains sensitive to nuances in senior Fed officials' language.
Growth: Sprint Then Slowdown
- Growth likely slowed in Q4 after a strong Q3, with drag from tariffs, shutdown and weaker capex.
- J.P. Morgan expects ~2% year-over growth by Q4 2026 with a 3% sprint then slowdown in H2 2026.