With Fed set to meet next week, December's rate cut now looks questionable
Summary
The Federal Reserve is scheduled to meet next week amid growing questions about whether its previous interest rate cuts were a mistake. Inflation has risen faster than expected, and job growth has been stronger than anticipated, suggesting the economy may need higher rates rather than more cuts.Key Facts
- Six months ago, the Fed cut interest rates for the third time in a row despite some officials disagreeing.
- Since the cuts, job growth has increased significantly, and inflation has risen beyond the Fed’s forecasts.
- Core inflation (excluding food and energy) rose from 2.8% to 4.1% annually in early 2026.
- Overall inflation, including higher energy prices due to the Iran war, reached about 5.5% annually.
- The unemployment rate has stayed steady at 4.3% for three months, with monthly job creation picking up again.
- Some Fed officials believe the economy may not need lower rates and that inflation control is now the bigger concern.
- The Fed may need to reconsider its current policy, possibly pausing rate cuts or raising rates to manage inflation.
- Fed Governor Christopher Waller suggested keeping rates steady for now but is open to raising them if inflation expectations rise.
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