Fed faces critical data week amid divided views

(The Center Square) – The Federal Reserve cut interest rates again last week, lowering the target range for the federal funds rate by 25 basis points to 3½–3¾ percent. The decision reflects a growing concern about downside risks to the labor market, even as inflation remains above the Fed’s 2% target. A closer look at the Summary of Economic Projections (SEP) helps explain why the decision was far from unanimous. While the median projection for the unemployment rate is essentially unchanged from September, inflation in 2026 is now expected to be modestly lower than previously thought. The median projection for the fed funds rate path, however, was left unchanged relative to the September SEP. What did change meaningfully was the degree of disagreement within the Committee. At the December meeting, three policymakers dissented from the 25-basis-point cut – Austan Goolsbee and Jeffrey Schmid favored no change, while Stephen Miran argued for a larger 50-basis-point cut. That marks a notab