Federal Reserve's December Rate Path Faces Test as Non-Farm Data Becomes Key Variable

The Federal Reserve has kept the federal funds rate target range unchanged at 3.75%-4.00%, acknowledging that inflation remains high. The market widely expects the Fed may further raise rates in December. Investment analyst Michael Kramer believes that if the October employment report meets expectations and the unemployment rate does not rise significantly, the market's judgment on the Fed's policy path will not change substantially. Conversely, if job growth significantly exceeds forecasts, the unemployment rate declines, and wage growth is strong, investors may reassess the number of rate hikes and the endpoint of the rate hike cycle. According to MarketWatch statistics, since January 2025, there have been 11 instances where non-farm data exceeded market expectations, 10 instances where it fell short, with the average deviation between actual data and forecasts reaching tens of thousands of jobs.

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