The Fed cut rates by 25bps on Wednesday, as expected, bringing the total amount of easing since September to 100bps.

It’d be an understatement to say not everyone sees a rationale for additional easing (or “removal of restriction,” to use the Fed’s preferred style). By appearances — and notwithstanding the “K-shaped” discussion and the attendant debate around the worsening “haves” / “have-nots” divide — the US economy’s doing quite well. And core inflation looks poised to run above the Fed’s target in perpetuity.

At the same time, pressing questions about the read-through of the incoming administration’s trade and immigration policies for consumer prices and low-wage labor, respectively, won’t be answered for months (or longer), and that’s to say nothing of the myriad questions swirling around fiscal policy.

Long story short, there’s an argument for standing pat amid pervasive ambiguity, especially when the jobless rate, despite rising back near cycle “highs,” still counts as historically low and underlying price growth’s unlikely to receded sustainably to target anytime soon.

But Jerome Powell wanted to squeeze one more reduction in before pausing, so that’s what the Fed did Wednesday. Beth Hammack dissented in favor of keeping rates on hold. The statement language contained only a minor tweak — it was almost verbatim from November’s statement, but Jerome Powell was keen to emphasize that a slight tweak reflected the Fed’s assessment that it’s likely time to slow the pace of cuts.

The new dot plot tips just 50bps of cuts for 2025, down from 100bps in September. The forecasts for core inflation were revised higher for 2025 (to 2.5% from 2.2%) and 2026 (to 2.2% from 2.0%). The headline PCE outlook was likewise revised higher, and the growth outlook now shows 2.5% for this year versus just 2% in September’s SEP (mark to market).

Not surprisingly, the long run dot (i.e, the neutral dot) moved up again, to 3%. It’s now 50bps higher than where it sat from June of 2019 to December of 2023 (it briefly moved as low as 2.4% at the March 2022 meeting, ironic considering that’s when the rate hikes began).

Bottom line: There were no surprises on Wednesday, unless you think it’s “surprising” that a Committee which now sees meaningfully higher core inflation over the medium-term and a higher neutral rate is still cutting with growth running 3% and jobless rate expected to top at 4.3%, which is to say much closer to full employment than levels anyone would associate with any sort of trouble.

The upward shift to the 2025 dot (i.e., the nod to two fewer cuts next year versus the trajectory tipped in September’s SEP) is meant to square various circles. I doubt critics will be mollified, but it’s worth noting that just a handful of officials see more than 50bps of cuts next year. So, it’d be fair to call December’s decision a “hawkish cut,” assuming you aren’t bothered by jargon and oxymorons.