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11.12.2025 02:03 PM
The Federal Reserve concluded its December meeting with another rate cut—this time reducing the federal funds rate by 25 basis points. The new target range is now between 3.50% and 3.75%. This marks the third easing of the year, following steps taken in September and October, and the market had already priced in this scenario. In essence, rates have returned to their lowest levels since 2022. However, the outward smoothness of this decision hides a significant divide within the regulator itself. For the first time since 2019, three Fed representatives opposed the final decision:
The context is also challenging. The economy is slowing, the labor market has cooled, and inflation continues to exceed the target of 2% by about one point. During the press conference, Jerome Powell described the situation as "complex" and emphasized that the committee unanimously recognizes heightened price risks and signs of a weakening labor market. After three rate cuts in 2025, the regulator is poised to approach 2026 with more caution. The latest forecasts indicate only one potential easing next year, exactly the same number the Fed projected in September.
The official statement again included phrasing about the "magnitude and timing" of future actions. This signals that officials do not intend to rush and want to more thoroughly evaluate incoming macroeconomic data and the balance of risks. The disagreements within the Fed only heighten the intrigue:
The market is closely monitoring this range of opinions. This will determine how cautiously the Fed will navigate amid a slowing economy and unstable inflation dynamics.
Authorities have also adjusted macroeconomic guidelines, laying out a more confident scenario for the coming year. Inflation is expected to decline to 2.5% in 2026, down from previously forecasted 2.6%. By the end of 2025, it should slow to 3%. The GDP forecast for next year has been raised to 2.3% from the previous 1.8%. The growth estimate for the current year has been increased by one-tenth to 1.7%. The unemployment rate is expected to decline to 4.4% in 2026. Currently, it stands at 4.4%, consistent with the previous forecast. The Fed also confirmed its intention to resume purchases of short-term Treasury securities if necessary, to ensure sufficient reserves in the banking sector and maintain a stable balance sheet size.
The information backdrop ahead of the meeting was limited. The publication of several key statistical series was delayed due to a temporary government shutdown that lasted throughout October and part of November. For instance, data on the personal consumption expenditures index (the Fed's preferred inflation gauge) was released with a two-month lag. The core index rose by 2.8% in September, which is one-tenth lower than the August figure. The labor market exhibited an unexpected recovery in September, with 119,000 jobs created after a decline of 4,000 in August. This trend has continued the uneven trajectory of recent months:
The situation with the data is expected to normalize starting next week. A report on November employment will be released on Tuesday, followed by fresh inflation indicators. So far, the forecast for the Fed's interest rate remains unchanged since the September round, with the Fed still anticipating one reduction of 25 basis points in 2026. The accompanying statement noted that economic activity is growing at a moderate pace, the labor market is losing momentum, and inflation remains above the target level. The committee acknowledged increased uncertainty in the forecast and risks of weakened employment.
The market reacted moderately positively to the December Fed decision, with the S&P 500 rising by about 0.2%. The Nasdaq Composite managed to reduce its morning decline, while the Dow Jones intensified its gains. This dynamic reflects investor expectations that had already priced in policy easing and received confirmation of this. Analysts note that future communication from the regulator may become more challenging. Standard Chartered economists Steve Englander and John Davis highlighted this concern even before the meeting. They pointed out the combination of several factors:
Collectively, they argue that all these factors complicate the perception of Fed signals and increase market skepticism regarding any long-term guidance.
President Donald Trump has entered the final phase of selecting candidates for chair of the Federal Reserve. The Financial Times notes that several candidates have made it to the final interview stage. Sources indicate that alongside White House economic advisor Kevin Hassett, three additional candidates are being considered. Hassett, according to the newspaper's sources, remains the frontrunner despite concerns from some investors regarding his closeness to the president and the risks of excessive policy easing. However, the continuation of interviews indicates that his appointment is not considered a foregone conclusion.
Trump has emphasized that he is considering several candidates, although he has already developed his vision for the future head of the central bank. Currently, the list of contenders includes Hassett, Warsh, Christopher Waller, and Michelle Bowman, as well as Rick Rieder, BlackRock's Chief Investment Officer for Global Fixed Income. Trump and Bessent are expected to have another meeting with one of the candidates next week, with a final decision planned for early January. The term of the current Fed Chair, Jerome Powell, expires in May 2026, but he will remain a member of the Federal Reserve Board of Governors until January 2028.
December 11, 2:50 AM / ** / Japan / Business Sentiment Index (BSI) for Large Manufacturing Firms in Q4 / Previous: -4.8% / Actual: 3.8% / Forecast: 4.1% / USD/JPY – down
The BSI for Q3 came in at 3.8% after reporting -4.8% previously. This marks the first positive value over three periods. The improvement is attributed to an increase in export shipments. Companies ramped up shipments to the US ahead of the introduction of new American tariffs. A recent US presidential order established baseline tariffs of 15% on a broad range of Japanese goods. The BSI reflects the assessment of the business environment by large manufacturers and remains an important indicator of economic dynamics. Respondents expect an increase to 3.9% in Q4, followed by a slight decline in early 2026. If publication confirms the forecast (4.1%), the yen could receive support.
December 11, 3:01 AM / United Kingdom / ** / November Housing Price Balance / Previous: -17% / Actual: -19% / Forecast: -21% / GBP/USD – down
The UK housing price balance decreased to -19% in October, down from -17% the previous month. This figure continues to signal downward pressure on housing prices. The most significant weakness is observed in the southeast, London, and East Anglia. A modest decline is expected in the next three months, with the RICS forecast estimating -12%. The data remain above the September low (-21%), indicating a moderate softening of the market. However, the annual outlook is more optimistic, with some participants predicting a turnaround to positive dynamics. If the November figure aligns with the forecast (-21%), the British pound may weaken.
December 11, 3:30 AM / Australia / ** / Employment Growth in November / Previous: 6,470 / Actual: 55,256 / Forecast: -5,000 / AUD/USD – down
Full-time employment in Australia increased by 55,256 people in October. This figure is significantly above the average values observed since 1978. The historical maximum was recorded in 2021, and the minimum in 2020. The data reflect increased demand for labor and a recovery in certain segments of the labor market. If the November estimate comes in near the forecast (-5,000), the Australian dollar is likely to decline.
December 11, 4:30 PM / Canada / *** / Trade Balance for September (Deficit) / Previous: -3.82 billion / Actual: -6.32 billion / Forecast: -4.3 billion / USD/CAD – down
Canada's trade deficit widened to -6.3 billion Canadian dollars in August, up from -3.8 billion the previous month. This figure is among the largest recorded in history. Exports fell by 3% (to 60.6 billion), with the most significant decline occurring in metals and minerals, where price and volume reductions led to a 7.6% drop. Specific categories, including lumber, also showed weakness. The impact was exacerbated by American tariffs that reduced shipments to the US. Imports increased by 0.9% (to 66.9 billion). A sharp rise in purchases of precious metals offset the declines of previous months. Meanwhile, energy imports fell, which reduced receipts from the US. The bilateral trade surplus weakened. If the September figure is close to the forecast (-4.3 billion), the Canadian dollar could gain support.
December 11, 4:30 PM / United States / *** / Trade Balance for September (Deficit) / Previous: -78.154 billion / Actual: -59.55 billion / Forecast: -63.3 billion / USDX (6-currency USD index) – down
The US trade deficit narrowed to 59.6 billion dollars in August, down from 78.2 billion the previous month. Imports decreased by 5.1% (to 340.4 billion), with the primary drop attributed to non-monetary gold. Purchases also declined in the following categories:
Certain categories demonstrated modest growth, including computers, pharmaceuticals, and services in telecommunications, IT, and tourism. Exports increased by 0.1% (to 280.8 billion). Support came from crude oil shipments, computers, travel services, and revenues from intellectual property. Sales of pharmaceuticals, automobiles, and gold decreased. In key areas, the deficit with China increased, remained stable with Mexico, while the gap with Vietnam, Taiwan, and the EU narrowed. If the September result aligns with the forecast (-63.3 billion), pressure on the dollar will persist.
December 11, 4:30 PM / United States / *** / Weekly Initial Jobless Claims / Previous: 218,000 / Actual: 191,000 / Forecast: 220,000 / USDX (6-currency USD index) – down
Initial claims dropped to 191,000 at the end of November, down 27,000 for the week. This figure is significantly below market expectations and represents the lowest level since September 2022. This period includes holidays, which traditionally increase data volatility. Continuing claims fell to 1.939 million. The trend suggests low layoff activity amid a moderate hiring pace. The number of claims from federal employees also decreased. If the new report comes close to the forecast (220,000), the dollar may weaken.
December 12, 7:30 AM / Japan / ** / Industrial Production Growth for October (Final) / Previous: -1.6% / Actual: 3.8% / Forecast: 1.5% / USD/JPY – up
Japan's industrial production rose by 3.8% in October after a significant decline earlier. The data indicate a recovery in output across major sectors. Historically, this indicator has shown high volatility, but the current gain surpasses long-term averages. The improvement reflects increased external demand and higher factory utilization rates. If the final result is close to the forecast (1.5%), the yen's position may weaken.
December 12, 10:00 AM / Germany / ** / Inflation Rate for November (Final) / Previous: 2.4% / Actual: 2.3% / Forecast: 2.3% / EUR/USD – volatile
Germany's annual inflation rate was 2.3% in November, matching preliminary estimates and repeating October's level. The figure remains below the forecast. Inflation in services held steady at 3.5%, while commodity price dynamics slowed to 1.1%. Food prices increased moderately, while energy costs decreased less than the previous month. On a monthly basis, the consumer price index declined by 0.2% after a 0.3% increase in October. Core inflation slowed to 2.7%. The harmonized EU index rose to 2.6% on a year-on-year basis, exceeding both last month's estimate and the forecast. The monthly decrease was 0.5%. If the final figure remains close to the forecast (2.3%), the euro's reaction will be mixed.
December 12, 10:00 AM / United Kingdom / *** / GDP Growth for October / Previous: 1.2% / Actual: 1.1% / Forecast: 1.4% / GBP/USD – up
The UK economy grew by 1.1% in September after previously recording 1.2%. This figure fell short of expectations. The data continue to reflect a moderate recovery in the economy following a volatile period over recent years. Long-term statistics show significant fluctuations. However, the current rates remain in positive territory. If the October result approaches the forecast (1.4%), the British pound could gain ground.
December 12, 10:00 AM / United Kingdom / *** / Industrial Production Growth for October / Previous: -0.5% / Actual: -2.5% / Forecast: -1.2% / GBP/USD – up
UK industrial production decreased by 2.5% in September. This figure was worse than expected and reflects a deterioration in business activity across key segments. The decline was the most pronounced since July 2024. The sector is under pressure from:
If the actual data for October come closer to the forecast (-1.2%), the pound may receive some support.
December 12, 10:00 AM / United Kingdom / *** / Construction Output Growth for October / Previous: 1.1% / Actual: 1.3% / Forecast: 1.6% / GBP/USD – up
Construction output increased by 1.3% in September, exceeding expectations. The growth was driven by new projects, which contributed 2.5%. Repair and maintenance decreased for the first time in several months. On a monthly basis, there was a 0.2% increase, offsetting the previous decline. In the third quarter, total volume grew by 0.1%. If the October figure comes close to the forecast (1.6%), the pound may strengthen.
December 12, 4:30 PM / Canada / *** / Construction Permits Growth in October / Previous: -4.0% / Actual: 4.5% / Forecast: -1.2% / USD/CAD – up
Construction permits in Canada rose by 4.5% in September, reaching 11.7 billion Canadian dollars. This figure rebounded from a decline in August and exceeded market expectations. The residential segment increased by 4.8% due to:
Non-residential permits grew by 4.0%, driven by the expansion of commercial and industrial properties in the same regions. A partial easing was observed in institutional projects. If the October data aligns with the forecast (-1.2%), the Canadian dollar may gain value.
December 12, 7:00 PM / Russia / ** / GDP Growth in Q3 / Previous: 1.4% / Actual: 1.1% / Forecast: 0.6% / USD/RUB – up
Russia's GDP increased by 1.1% year-on-year in the second quarter. However, the growth rate has slowed compared to the previous period. This figure marks the lowest level in the last two years. The dynamics are associated with:
A weak external environment is also exerting pressure: crude oil exports have slowed, gas supplies have decreased due to sanctions, and trade with China is constrained by domestic market factors. A strong ruble after the increase in the key rate has further limited export revenues. If the actual third-quarter figure aligns with the forecast (0.6%), the ruble may weaken.
December 12, 9:00 PM / United States / ** / Weekly Total Rig Count / Previous: 544 units / Actual: 549 units / Forecast: – / Brent – volatile
The number of active drilling rigs in the US increased to 549 units in the first week of December. This rise continues the moderate activity in the energy sector. The dynamics remain far from historical highs but reflect stable demand for extraction. Statistics indicate a gradual recovery from pandemic lows. The absence of a forecast makes the reaction of the oil market uncertain.
Additionally, speeches from representatives of leading central banks are expected during these days. Their comments typically generate volatility in the currency market, as they may indicate future rate plans by regulators.
The economic calendar can be accessed via the link provided. All indicators are reported on a year-on-year (y/y) basis. Monthly data are noted as (m/m). An asterisk (*) indicates the importance of the report for the assets available on the InstaTrade platform, ranked by increasing significance. Please remember that the publication times are in Moscow time (GMT +3.00). You can open a trading account here. To keep your tools readily accessible, we recommend downloading the MobileTrader app. Also, watch the market video news from the InstaTrade Group.
