The timing of the Federal Reserve's December FOMC meeting has become a hot topic on Wall Street.
According to recent reports, UBS noted in its latest research that the Fed faces an unprecedented dilemma regarding the December meeting schedule. The originally planned FOMC meeting on December 9–10 would occur before the release of two critical jobs reports—key data points for determining potential rate cuts. This has sparked market speculation about whether the Fed might postpone the meeting by a week to incorporate the latest employment figures into its decision-making.
The scheduling conflict stems from delayed data releases due to government shutdowns. The U.S. Bureau of Labor Statistics announced that the November jobs report will be postponed to December 16, which will also include previously skipped October data. If the meeting proceeds as scheduled, the FOMC would only have September’s employment data to guide its rate decision.
Historical precedents suggest meeting adjustments are possible. In 1971 and 1974, the Fed delayed meetings due to exceptional circumstances. Legally, the Federal Reserve Act only mandates that the FOMC meet at least four times a year, leaving flexibility for date changes. The current December 9–10 schedule is already the earliest since 2003; a delay to December 16–17 would still fall within historical norms.
UBS highlighted that single jobs reports have historically shifted monetary policy, and the FOMC now risks missing two crucial reports. Additionally, the committee is divided on a December rate cut, with some members supporting a 25-basis-point reduction while others advocate for holding steady. This intensifies the importance of the meeting’s timing.
A delay could heighten policy uncertainty but improve decision-making quality. UBS maintains its forecast of a 25-basis-point December cut but acknowledges risks of a pause.
**Data-Release Misalignment Creates Decision Blind Spots** The core issue lies in the misalignment between the meeting date and key data releases. The October and November nonfarm payroll reports, due December 16, would miss the December 10 FOMC meeting, leaving policymakers with incomplete information.
September’s jobs data already showed labor market weakness, with private-sector employment growing by just 97,000. Excluding healthcare and social assistance, the four-week moving average employment change was negative (-13,000), raising concerns about further deterioration.
UBS’s labor market leading indicator dipped to 75% in September from August’s 88% (a post-financial-crisis high) but remains elevated. The indicator, based on private nonfarm payroll data, assesses near-term job-loss risks.
Twelve of 16 leading industries contracted in September, with declines widening. Excluding healthcare, private employment growth remained negative on a four-month moving average (-133,000). Cyclical sectors like manufacturing, construction, and professional services continued to weaken. While leisure and hospitality improved slightly, healthcare—the primary job-growth driver—showed fading momentum. UBS noted that concentrated growth in non-cyclical sectors like healthcare often precedes economic slowdowns.
The Fed has historically been highly sensitive to jobs data, with single reports prompting policy shifts ranging from 0 to 50 basis points. Missing two delayed reports increases the risk of misjudgment. The Fed has previously warned that policymaking without official data is akin to "navigating in fog."
Waiting for the December 16 jobs reports would provide clearer guidance. While November CPI data is also delayed (to December 18), labor market insights are currently more critical. Fed officials have repeatedly emphasized that labor market risks are central to policy considerations.
**Historical Precedents Support Flexibility** Though FOMC schedules are typically fixed, adjustments have occurred before. In 1971, then-Chair Arthur Burns delayed a May meeting by a week due to Vietnam War protests. In January 1974, a meeting was postponed from the 15th to the 22nd to align with an international conference, with subsequent meetings adjusted accordingly.
Beyond delays, the Fed has added emergency meetings, such as during the 2008 crisis and in March 2020, when five emergency cuts totaled 250 basis points.
Legally, the Federal Reserve Act imposes no strict schedule, requiring only that "the Committee meet in Washington, D.C., at least four times a year at the call of the Board Chair or any three members." The current December 9–10 dates are the earliest since 2003; a one-week delay would still fit historical norms without violating rules.
**Policy Divisions Heighten Timing Importance** Internal Fed divisions over a December rate cut amplify the meeting’s timing significance. Recent remarks reflect the split seen in October’s FOMC minutes.
Governor Christopher Waller supports a 25-basis-point cut, citing near-target core inflation and labor market softness. However, Cleveland Fed President Loretta Mester expressed reservations, fearing prolonged inflation cycles. Dallas Fed President Lorie Logan stressed needing clearer evidence of slowing inflation or further labor market cooling before endorsing cuts.
UBS noted that proceeding with only September jobs data could fuel dissent, with some members opposing action due to insufficient data while others push for preemptive easing. The Fed may weigh the risks of waiting until January against cutting in December only to see stronger subsequent data.
A delay would signal clearer policy intent, while sticking to the schedule suggests either a willingness to act without complete data or sufficient consensus on December’s stance.