MUFG: Federal Reserve Policy May Face Challenges in Second Half of Next Year Amid Leadership Changes

On December 11, MUFG highlighted that the Federal Reserve reduced interest rates by 25 basis points in a 9-to-3 vote, with Chair Powell emphasizing labor market risks. The Fed projected that product inflation might peak by the first quarter of 2026 without the introduction of new tariffs, though risks of persistency remain. According to the latest dot plot, the Fed anticipates only one rate cut by 2026, contrasting sharply with market expectations of around 55 basis points. Powell stated that the Fed is in a strong position to observe U.S. economic trends with patience. MUFG further noted that possible leadership changes next year could complicate policy direction and heighten market uncertainties.