December 10 2025: The Federal Reserve’s latest interest rate cut today strengthens the case for two further reductions in 2026, despite the central bank’s deliberately cautious tone, predicts the CEO of one of the world’s largest independent financial advisory organizations.

Nigel Green, CEO of deVere Group, says today’s move confirms that US monetary policy has entered an easing phase that remains incomplete.

“This rate cut validates our view that restrictive policy is giving way to a slower, more measured recalibration,” he says. “The Fed’s language is hawkish by design, yet the underlying signals continue to point toward additional easing next year.”

The Fed lowered borrowing costs by a quarter percentage point, taking its benchmark rate to a range of 3.5% to 3.75%.

Officials paired the move with messaging aimed at tempering expectations for rapid follow-up action, a combination that has quickly been described in markets as a “hawkish cut.”

He says that characterization supports deVere’s forecast rather than undermining it.

“A hawkish cut is a hallmark of a central bank managing transition,” he says. “It reflects disagreement over timing, not direction.

“The Fed is easing while attempting to keep financial conditions from loosening too quickly.”

The internal divide within the rate-setting committee remains clear. Some policymakers argue that further cuts are needed to prevent a deeper slowdown in the labour market, where job growth has weakened noticeably this year.

Others warn that inflation could remain above target, particularly with tariffs introduced by President Donald Trump pushing up prices across parts of the economy.

Nigel Green says this split explains why the Fed is unlikely to commit to an aggressive path, but also why holding rates steady for too long would carry risk. “Policy remains restrictive in real terms,” he says.

“If hiring continues to cool and inflation does not reaccelerate, keeping rates at current levels into 2026 would tighten conditions by default.”

Labour-market dynamics form a key pillar of deVere’s outlook. Employment weakness often develops gradually before becoming visible in headline figures. Once firms slow hiring and reduce job turnover, momentum rarely reverses quickly.

“The Fed is acting on forward-looking risk,” says Nigel Green. “By the time deterioration becomes obvious, the cost of delay rises sharply. Two cuts next year would reflect risk management rather than urgency.”

Inflation concerns, while valid, carry a different profile than during earlier phases of the tightening cycle. Tariff-related pressures raise prices but do not generate demand-driven momentum. As a result, higher rates offer limited offset.

“Monetary policy cannot reverse tariff effects,” says Nigel Green. “What it can do is compound the drag on growth if it remains overly tight. That asymmetry increases the likelihood of further adjustments once inflation shows stability rather than acceleration.”

Another factor reinforcing the forecast is the impending leadership transition at the Fed. Today’s decision comes ahead of the announcement of a new chair, following President Trump’s confirmation that a nomination will be made early next year. Jerome Powell’s term ends in May, marking a sensitive institutional handover.

Nigel Green says such transitions typically favour continuity. “Incoming leadership rarely begins with abrupt shifts,” he says.

“Measured changes spread over time allow credibility to carry across administrations. That makes a series of modest cuts more likely than a prolonged pause.”

Financial conditions also argue in favour of further easing. Interest-sensitive sectors continue to face pressure, while credit availability remains tight for smaller businesses. Market pricing alone cannot resolve these constraints without follow-through from policy.

“Validating part of the adjustment through action reduces the risk of uneven tightening,” says Nigel Green. “Two cuts across 2026 would still leave policy disciplined.”

He adds that today’s decision should be viewed as confirmation of trajectory rather than conclusion. “This was not a finishing move,” he says. “It was a controlled step in a longer process.”

Nigel Green concludes: “The Fed’s hawkish cut does not close the door on further easing.

“It reinforces our expectation that next year brings additional reductions as policy aligns more closely with a slowing labour market and a changing leadership landscape.”

The Maravi Post