Analysis of Fed. Chair Powell's Dec 10 2025 Press Conference Transcript

Analysis of December 10, 2025 Chair Powell's Press Conference Transcript

While the economy is expanding and employment is shrinking, does reducing borrowing rate and increasing money supply through the repurchase program contradict? We let ELAINE's abstractive symbolic logic to discover what is not said, the hidden message.

Conclusion

Tariff induced inflation is still hanging in the balance. While SCOTUS has yet to decide the disposition of Trump's tariff, many businesses are caught in the middle. It is likely that inflation may not be a one-off event. AI Data Centers are funded by debt. The new founded money supply may end up as trillion dollars of credit flowing to the AI industry whose incentive is not to create jobs, but adding more infrastructure, like hardware and buildings. The Central Bank is now caught between a rock and a hard place. Further change in monetary policy is imminent.

How do we derive the above conclusion?

Let's take a look at ELAINE's analysis.
ELAINE's Logical Analysis Report shows there are four main stories in Fed's transcript. They are "inflation", "policy", "employment", "market".

What is reflected on ELAINE's knowledge map?

Given the theme is "Central Bank Monetary Policy", it is the top node as depicted in ELAINE's knowledge map as "Navigation", signifying the starting point to navigate the map from the top down. Child nodes are the top-topics in ELAINE's Logical Report. If we look at these nodes, there are four nodes, namely, "inflation", "policy", "employment", "market".

Three of the four child nodes, "policy", '"inflation", and "market" are represented with green color. However, "employment" is represented by an orange node. This tells us that "policy", "inflation" and "market" are independent stories while "employment" is a supporting story. From semantics point of view, "employment" is a consequence of "policy", "inflation", and "market". As such, it is a key deciding factor on FOMC's decision to cut rate. It leaves inflation to settle on its own while putting priority to enable a moment of QE or looser money policy.

FOMC recognized there a need to strengthen money supply to stimulate business employment. Under the backdrop of a bullish stock market and a weakening labor market, this transcript has failed to mention the elephant in the room. it is the trillions in AI infrastructure spending and hundreds of billion in closed circular transactions among AI companies. It is giving a false impression on the economy. Any increase in money supply and low borrowing rate will be likely going towards the buildout of AI infrastructures and little to improve employment.

The policy to cut rate and increase money supply is supported by the following excerpts from ELAINE's Semantic Hierarchy:

Key Focus:

Abstraction depicting justification for rate cut:

Abstraction: (INFLATION, EMPLOYMENT, RISK-FREE)
Excerpt: "In the near term, risks to inflation are tilted to the upside and risks to employment to the downside a challenging situation. There is no risk-free path for policy as we navigate this tension between our employment and inflation goals."

Abstractions depicting QE to increase money supply:

Abstraction: (MARKET, PURCHASES)
Excerpt: "As detailed in a statement released today by the Federal Reserve Bank of New York, reserve management purchases will amount to $40 billion in the first month and may remain elevated for a few months to alleviate expected near-term pressures in money markets"

Abstraction: (MARKET, DECLINE)
Excerpt: "... to $40 billion in the first month and may remain elevated for a few months to alleviate expected near-term pressures in money markets. Thereafter, we expect the size of reserve management purchases to decline, though the actual pace will depend on market conditions.

Link to view full ELAINE ANALYSIS