Moody's Talks - Inside Economics 10 Doves, 2 Hawks, and a Partridge in a Pear Tree
Dec 12, 2025
The team dives into the Federal Reserve's recent rate cut, debating if the messaging felt more hawkish or dovish. They explore the implications of job losses and whether these can avoid a looming recession. A look at the labor market reveals concerning trends, while the discussion shifts to tariffs and inflation’s impact on the Fed's independence. Listener questions spark debates about gig work and the rationale behind a 2% inflation target. Ultimately, they ponder how rising equities coexist with job weakness.
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Hawkish Cut, Dovish Undercurrents
- The Fed cut 25 bps but signaled data dependence, creating mixed hawkish and dovish signals.
- Dissenters and revised SEP projections add to the ambiguity about future cuts.
Powell's Mixed Message
- Powell emphasized weaker employment and data dependence, which can be interpreted as dovish pressure for future cuts.
- Simultaneously, Fed's growth and rate projections were nudged hawkish, creating cross-currents.
Job Revisions Shift Policy Odds
- Powell flagged large downward payroll revisions since May implying net job losses, which is dovish.
- Bond yields fell and markets priced more cuts, reflecting investors leaning dovish.