The Fed Lowered Rates Again. Is It Really a Surprise?

Yeva Nersisyan and L. Randall Wray

Economics Policy Note Archive from Levy Economics Institute

Abstract: The whole world was watching on December 10, 2025 to finally find out what the Fed was going to do. Big money bets were placed--would the Fed leave rates unchanged (potentially exposing the Board of Governors to the wrath of President Trump) or would they lower it--and if so, by how much? Even regular Americans now gamble on the Fed’s decision ($300 million for the September meeting alone) through "prediction markets." The Fed's decision was supposedly made much more difficult because the government shutdown caused the BLS to abandon collection of October's data. They were "flying blind"--to coin a phrase we have been using at Levy for three decades now. How could these technocrats possibly make a decision without knowing precisely how many hundredths of a percentage point the rate of inflation and the unemployment rate might have moved in October?

Date: 2025-12
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