The Federal Reserve heads into 2026 swirling in a messy mix of economic pressures and political uncertainties.

Federal Reserve chair Jerome Powell has expressed concern over the so-called "K-shaped" economy the U.S. is experiencing.

Federal Reserve officials have voted to cut interest rates by 25 basis points at their December FOMC meeting on Wednesday, lowering rates to a range of 3.5 to 3.75%. The announcement was followed by a press conference with Fed Chair Jerome Powell,

The end of Jerome Powell’s term as Fed chair will give President Trump his biggest opportunity yet to reshape the central bank.

U.S. Federal Reserve Chair Jerome Powell walks as he attends to hold a press conference following a two-day meeting of the Federal Open Market Committee (FOMC), at the U.S. Federal Reserve in Washington, D.C., U.S., December 10, 2025. REUTERS/Kevin Lamarque

Federal Reserve Chair Jerome Powell downplayed dissenting votes against Wednesday’s decision to lower interest rates again, but a slew of finer details from the meeting revealed just how divided the central bank has become.

The Fed chair said there's no risk-free path to reducing inflation while supporting a creaky labor market, but suggested that higher productivity could be a "get-out-of-jail-free" card.

Powell will be otherwise occupied as the Heat will play the Nets in Brooklyn that day. But his foundation is left in the hands of his mother, Sharon Powell, sisters Margaret Powell-Smart and Joniece Benjamin, and a handful of lifelong friends from his hometown.

Fed chief Jerome Powell said the rate of U.S. inflation should peak in the first three months of 2026 and then start to slow again. Barring, that is, additional U.S. tariffs, Powell said. The previous tariffs contributed to a rise in inflation this year,