Weekly economic & financial commentary

Summary

United States: December Rate Cut, Options Left Open for January

• The FOMC lowered the fed funds rate 25 bps at its December meeting and left its options open for January as the Committee weighs incoming data with a wide dispersion of views. Data out this week continue to show the labor market losing steam, supporting the case for returning monetary policy to a neutral stance.
• Next week: Employment (Tue.), Retail Sales (Tue.), CPI (Thu.)

International: Global Central Banks Holding Steady

• In contrast to the FOMC’s rate cut, most global policymakers played it cool in a jam-packed week of central bank decisions, opting to hold steady. The Bank of Canada, Reserve Bank of Australia, Swiss National Bank and Brazilian Central Bank all kept policy rates unchanged. Meanwhile, outside the rate-setting arena, Mexico’s inflation surprised to the upside.
• Next week: China Industrial Production and Retail Sales (Mon.), Bank of England Policy Rate (Thu.), European Central Bank (Thu.)

Topic of the Week: A Cut to Close Out the Year

• The December FOMC meeting included the latest Summary of Economic Projections. Despite dissents and a hawkish tilt to the dot plot, the Committee maintains an easing bias.

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