As markets wrapped up 2025, the final "Super Central Bank Week" brought a flurry of critical data and policy signals that could shape the global economic landscape in 2026. Delayed U.S. non-farm payroll and inflation figures—postponed due to a record-breaking government shutdown—were finally released, offering fresh insights into the health of the American economy and the Federal Reserve's next moves.
In this special year-end edition of DDN Business Insider, host Laura Cheung welcomed a panel of expert voices: economist Song Qinghui, Harvard visiting scholar and financial expert Hu Dinghe, and researcher Zhou Mi from the Chinese Academy of International Trade and Economic Cooperation. Together, they analyzed the implications of the latest data, the Fed's policy trajectory, and the broader global monetary landscape.
U.S. Economy: A Fragile Balance
According to Mr. Zhou, the November employment numbers showed slight improvement over October, yet unemployment remains a growing concern. He attributed recent labor market shifts partly to adjustments in Trump-era tariff policies, which may have supported certain industries but have yet to show clear inflationary effects. Zhou warned that neither the employment nor inflation data suggest a healthy U.S. economy, especially during the holiday season when figures may be distorted.
Economist Song Qinghui noted a "weak equilibrium" in the U.S. economy. While consumer resilience persists, the softening labor market suggests fading wage momentum. He argued that the Fed's prior assumptions may no longer hold, predicting that in 2026, the central bank will likely shift from preemptive to reactive rate cuts.
Rate Cuts on the Horizon?
Mr. Hu Dinghe echoed this view, acknowledging that Wall Street currently sees room for rate cuts in 2026. However, the monetary easing cycle that began in 2024 is entering its late stage, meaning policy space is narrowing.
Zhou added that the potential for rate cuts is growing, especially given inflation and employment trends. He emphasized that the upcoming appointment of a new Fed Chair by Donald Trump could reinforce the dovish shift, especially if a candidate supportive of aggressive rate cuts is chosen.
The Fed Chair Factor: Hawk or Dove?
Both Hu and Song highlighted that while the Fed Chair cannot unilaterally dictate policy, their stance heavily influences market expectations. Song warned that a Trump-nominated chair—particularly one like Kevin Hassett, rumored to support rapid rate cuts—could undermine the Fed's perceived independence. This, he said, might spark a disconnect between short-term and long-term yields, potentially disturbing financial markets.
2026: An Election Year of Economic Uncertainty
The panelists agreed that the U.S. midterm elections will shape 2026, further complicating policy direction. Mr. Hu predicted greater political mobilization, with tariffs and trade policies likely used as tools for electoral gain. He also warned of rising policy uncertainty as a key risk for global markets.
Song suggested that tariffs might become more symbolic than punitive, with forecasts indicating a potential 2% decrease in effective tariff rates due to legal and economic pressures. Zhou warned that the U.S. may take a more aggressive stance in trade negotiations, shifting economic burdens to other countries. He stressed the need for global vigilance amid U.S. political and economic shifts.
Global Central Banks: A Diverging Path
Beyond the U.S., central banks around the world are taking divergent policy paths. Last week, the Bank of Japan raised rates, and the European Central Bank held steady, while the Bank of England cut rates. Song argued that this divergence may usher in regional slowdowns, and emerging markets could face capital outflow risks due to a lack of coordinated easing among major economies.
Conclusion: 2026 Will Be Decisive
As 2025 draws to a close, the final "Super Central Bank Week" has left markets with much to digest. From fragile U.S. data to Fed leadership uncertainty and widening global policy gaps, the stage is set for a volatile but pivotal 2026.
Stay with DDN Business Insider as we continue to monitor and decode the forces shaping the new year.
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