Fed increasingly fractured over Dec rate cut

Federal Reserve officials are growing increasingly fractured over whether to cut interest rates in December, the Wall Street Journal's Nick Timiraos reported on Tuesday.

Timiraos who earned the moniker of the "Fed whisperer," said officials are split over what poses a greater threat to the economy sticky inflation or a sluggish labor market with recent delays in official data, due to a prolonged government shutdown, adding to this friction.

The central bank had cut interest rates by 25 basis points in near unanimous decisions in September and October.

But a contingent of hawkish policymakers questioned the need for further rate cuts, especially a third consecutive cut in December.

Chair Jerome Powell had also pushed back against expectations that a December cut was a given.

Friction over a December cut was exacerbated by the longest ever government shutdown, which delayed the release of several official inflation and labor reports.

Still, the shutdown is set to end this week, allowing the government to release several key economic prints before the Fed's meeting in December.

CME Fedwatch showed markets pricing in a 61.9% chance the Fed will cut rates by another 25 basis points during its December 10-11 meeting, and a 38.1% chance it will hold rates steady.

Source: Investing.com