Context and market expectations regarding the Fed
The market foresees a probable 25 basis point cut in the interest rate by the Fed in December 2025, its third adjustment of the year. This measure seeks to moderate the economic slowdown in the face of inflation still above 2% and signs of job cooling.
The Federal Open Market Committee (FOMC) presents internal divisions, with some members favoring maintaining rates to control inflation and others supporting cuts to stimulate the economy. This debate reflects the current complex economic situation.
Market reaction is cautious, with volatility in stocks, bonds and currencies. Investors expect clear signals about the Fed's future strategy and how it will handle inflation and the labor market.
Probable cut of 25 basis points in December 2025
The Fed has a high probability, close to 80-90%, of cutting 25 basis points in December 2025, which would be its third cut of the year. This action aims to sustain growth without triggering excessive inflation.
The cut is in line with market expectations, which anticipate the rate in a range of 3.50% to 3.75% at the end of the year, balancing risks between moderate inflation and a less robust labor market.
Internal division and discussions of the FOMC
The FOMC showed divisions over how to balance the dual mandate of keeping inflation near 2% and maximum employment. Some members prioritize containing inflation, while others give more weight to declining occupational risks.
These internal differences are reflected in dissenting votes in meetings during 2025, evidencing doubts about the moment and magnitude of adjustments in monetary policy in the face of an uncertain economic environment.
Cautious reaction and volatility in financial markets
Markets respond cautiously to Fed decisions, exhibiting volatility in stocks, bonds and the dollar due to uncertainty about future movements and macroeconomic risk management.
Investors are carefully evaluating whether the rate cut in December begins a sustained cycle of flexibility or whether it will be a tactical adjustment in a still tense and changing economic context.
Factors that influence the Fed's monetary policy
The Fed considers inflation, the labor market, GDP and inflation expectations to decide its policies. It also evaluates structural changes and the natural interest rate.
Its goal is to balance price stability near 2% with maximum employment, adjusting rates and open market operations to influence the economy.
The strategy is dynamic and adaptive, responding to economic indicators and conditions to maintain macroeconomic stability.
Weakening of the labor market and moderation of employment
The labor market in the US showed cooling with lower job creation and an increase in the unemployment rate to 4.3% in 2025.
Weekly job losses and a record job burnout were reported, affecting hiring dynamics and productivity.
Inflation and end of quantitative tightening
Inflation rebounded to 3% in September 2025, the highest level since January, due to food, tariffs and housing, complicating expectations.
However, it shows moderation in the inflationary core, favoring the possibility that quantitative tightening is nearing its end.
Inflation still high but in the process of moderation
Core inflation moderated slightly to 3.0%, with food and services showing signs of slowing although they remain high.
Tariffs maintain inflationary pressures, but a gradual reduction towards levels around 2.6% is expected in 2026.
Expect financial stability and possible asset purchases
The Fed slows down the reduction of its balance sheet, limiting redemptions to avoid liquidity tensions and preserve financial stability.
Short-term asset purchases are considered to inject liquidity, balancing rate cuts with systemic risks in the market.
Economic outlook for the eurozone for the end of 2025
The eurozone economy shows moderate growth towards the end of 2025, with an estimated GDP of around 1.3%. This growth is driven by stable labor markets and public spending.
The slowdown in foreign trade due to tariffs and geopolitical uncertainty limit economic dynamism, creating a context of fragile but positive growth.
Regional differences are notable, with Spain and Poland growing rapidly, while Germany and France show weaker expansion or almost stagnation.
Moderate GDP growth, estimated at 1.3% for 2025
Eurozone GDP is projected to grow 1.3% in 2025, slightly exceeding previous estimates, but remains below its long-term potential.
Key factors include robust employment, revenue growth and public spending with Next Generation EU funds and increased investments in defense and infrastructure.
Downward inflation towards ECB target
Inflation in the eurozone has been decreasing and is expected to close 2025 close to the 2% objective established by the European Central Bank.
Service prices continue to exert pressure, but moderation in energy and food favors this decline towards more stable levels.
Uncertainty factors: tariffs and geopolitical tensions
Tariffs imposed on European exports and geopolitical uncertainty continue to negatively affect investment and business confidence.
Although they slow growth, the impact is partially offset by expansionary fiscal policies and favorable working conditions within the eurozone.
Key economic indicators of Asia and China at the end of 2025
Asia projects economic growth of 4.5% in 2025, maintaining its global weight in the economy with advances in industry and commerce.
China presents an expansion close to 4.8%, with a slight slowdown compared to previous quarters but leading regional dynamism.
The region faces structural and geopolitical challenges as it seeks to strengthen economic integration and maintain financial stability.
Estimated regional growth at 4.5%, China close to 5%
The Asian economy will grow 4.5% in 2025, driven by emerging powers and recovery after global challenges.
China reaches close to 4.8% growth, with a moderate pace that reflects adjustments in the face of trade tensions and internal policies.
Structural and geopolitical challenges, with improvement in employment and trade
Asia must overcome geopolitical tensions and trade barriers that condition long-term trade and investment.
Despite this, improvements are observed in employment and trade, supported by regional agreements and technological innovation plans.
Global economic outlook for 2026
Moderate global economic growth of around 3% is expected, driven mainly by investment in artificial intelligence and expansionary fiscal policies.
The United States will maintain stable growth close to 1.7%, while Asia and emerging markets will grow around 5%, with special dynamism in China.
Inflationary risks and geopolitical tensions persist, but the global recovery will be resilient despite economic and political uncertainties.
