As the last interest rate meeting of the Federal Reserve approaches this year, the statements of Federal Reserve officials once again become the focus of market attention.

On December 3, Eastern Time, Federal Reserve officials took turns 'playing Tai Chi,' stating that inflation is declining towards the 2% target and implying support for further rate cuts. However, no one expressed support or opposition to rate cuts for the meeting two weeks later.

December Rate Cut Undecided

Mary Daly, President of the Federal Reserve Bank of San Francisco, stated in a media interview that in order to keep the economy in good shape, we must continue to adjust policies.

Whether in December or later, we will have the opportunity to debate and discuss this issue at the next meeting, but the key is that we must continue to ease policies to align with the economy.

Daly believes that a rate cut in December is still under consideration. Even with another rate cut, policy will remain restrictive, and the inflation rate is gradually decreasing; the neutral interest rate may have risen to close to 3%, but given the uncertainty of the outlook, the Federal Reserve should act cautiously.

Due to the good economic situation in the USA, the inflation rate is expected to reach 2%, the labor market is fully balanced, and a rate cut by the Federal Reserve at the meeting on December 17-18 is not impossible, but also not certain.

We must continue to adjust the policy. Now, whether it is in December or later, this is a question we will have the opportunity to debate and discuss at the next meeting. I think we need to maintain an open mind and collect more information.

On the same day, Chicago Fed Chair Austan Goolsbee also made a speech on the program, but he remained tight-lipped about the possible outcome of the December meeting.

In my view, interest rates will decrease significantly in the coming year from the current level, but we hold a meeting every six weeks because the situation is constantly changing. However, I believe rates will and should fall, based on the fact that inflation is decreasing.

Fed Governor Adriana Kugler also did not signal a rate cut in December. He stated that the economy remains in good shape, with the inflation rate steadily progressing towards the central bank's 2% target.

These data are consistent with inflation heading towards the Fed's 2% target, but the task is not yet complete. In particular, housing service inflation remains stubbornly high.

Kugler added that Friday's latest jobs data will rebound, perhaps not fully but some clues will be revealed. The US may already be close to full employment, the question is whether this state can be sustained.

Powell makes a heavyweight appearance in non-farm payroll.

On Thursday morning at 02:45 this week, Fed Chair Powell will deliver a speech, which will be his final public speech before the December meeting.

In his speech in November, he pointed out that the Fed does not need to rush to cut interest rates, because the employment market is robust and the inflation rate is still above the 2% target. In the latest speech, how he will describe the prospects for rate cuts in December and next year has attracted great attention from the market.

According to CME's "FedWatch", the market expects a high probability of a 25 basis point rate cut this month at 72.9%.

At the same time, the expectation in the interest rate futures market shows that due to increasingly bearish inflation prospects, market traders currently expect the Fed to only cut rates twice next year, which is far less than the four rate cuts implied by the Fed's September dot plot for next year.

In terms of data, the US nonfarm payroll employment in October plummeted to 0.012 million people, the lowest level since 2020. Although most Wall Street analysts believe it is mainly due to the impacts of two hurricanes and strikes in October, some analysts are also concerned that the job market is indeed deteriorating.$Boeing (BA.US)$Currently, economists generally expect November to be bearish.

Currently, economists generally expect November to be bullish.Non-farm employmentExpected to add 0.195 million people, significantly higher than 0.012 million people in October. However, a potential bearish signal is that the unemployment rate may further rise to 4.2%, higher than the previous month's 4.1%.

Senior investment strategist Angelo Edward pointed out that employment data will provide a clearer picture of the fundamental trend, which is important as there is much debate and uncertainty surrounding the interest rate path of the Federal Reserve.

Editor/Rocky