Fed Signals December Rate Cut to Protect Jobs Amid Inflation

Federal Reserve President Mary Daly has endorsed a December rate cut, marking a shift from the Fed’s prior focus on inflation to protecting the labor market. Daly argues the risk of a sudden labor market downturn now outweighs renewed inflation concerns. This potential Fed rate cut reflects a strategic pivot in the Fed’s dual mandate of price stability and maximum employment. Traders should watch upcoming data on employment, inflation, consumer spending, and business investment for clues on timing and magnitude. A December rate cut is typically bullish for risk assets, as lower borrowing costs can boost liquidity and economic growth. However, premature easing may reignite inflation or undermine Fed credibility. Market participants will gauge the Fed’s forward guidance and communication to manage volatility and confidence in monetary policy.