"Fed Mouthpiece": Powell Faces a Do-or-Die Battle as Half of His Colleagues Oppose Rate Cuts

On December 9, Nick Timiraos, a Wall Street Journal reporter known as the “Fed Whisperer,” wrote that Federal Reserve officials will hold their final two-day policy meeting of the year on Tuesday local time, and as many as half of the members in the meeting room may not support a rate cut. However, the final decision still rests with Chair Powell, who, despite facing rare opposition, appears ready to push for a rate cut. The central focus of this week’s meeting is whether Powell can build enough consensus to reduce dissenting votes. A possible path to achieving this would be to lower rates by 25 basis points to a range of 3.5% to 3.75%, and then signal a higher threshold for further easing by amending the post-meeting statement. As many as 5 of the 12 voting members of the Fed’s policy committee, and 10 of all 19 members, have indicated in speeches or public interviews that they do not see a compelling reason for a rate cut. Among them, only 1 formally voted against the Fed’s rate cut decision in October (another governor took the opposite stance but advocated for a larger rate cut). The delayed September nonfarm payrolls report released last month showed job growth exceeded expectations, but the unemployment rate rose to 4.4% (the highest level since the end of 2021), and August’s data was revised down to show negative growth. The key question is whether the slowdown in job growth reflects weak labor demand (which supports a rate cut) or a contraction in labor supply due to reduced immigration (which argues against a rate cut).