"The Fed's mouthpiece": Powell faces a do-or-die situation, with half of his colleagues opposing a rate cut.

On December 9th, Nick Timiraos, a Wall Street Journal reporter known as the "Federal Reserve mouthpiece," wrote that Federal Reserve officials will hold their final two-day policy meeting of the year on Tuesday, and as many as half of the members in the meeting room may not support a rate cut. However, the final decision rests with Chairman Powell, and despite facing rare opposition, he seems prepared to push for a rate cut.

The core focus of this week's meeting is whether Powell can build enough consensus to reduce dissenting votes. A possible path to achieving this is to cut interest rates by 25 basis points to a range of 3.5% to 3.75%, followed by a revised post-meeting statement signaling a higher threshold for further easing.

Five of the 12 voting members of the Federal Reserve's Policy Committee, and 10 of the 19 members in total, have stated in speeches or public interviews that they do not see strong reasons for a rate cut. Only one member formally voted against the Fed's October rate cut decision (another governor held the opposite view, but advocated for a larger rate cut).

The delayed September non-farm payroll report released last month showed that job growth exceeded expectations, but the unemployment rate climbed to 4.4% (the highest level since the end of 2021), and the August data was revised down to negative growth. The key question is whether the slowdown in job growth reflects weak labor demand (which supports interest rate cuts) or a contraction in labor supply due to reduced immigration (which opposes interest rate cuts).