Fed Daly's December Rate Cut Support & Reddit Discussions on AI Impacts

San Francisco Fed President Mary Daly’s surprise support for a December 2025 rate cut (citing labor market weakness) [1] has shifted market expectations to an ~84.9% probability of a 25-basis-point cut (CME FedWatch Tool) [4][5]. The Fed remains divided ahead of its December 9-10 meeting [2][3], with ongoing debate between dovish officials (like Daly and Governor Christopher Waller) and hawkish viewpoints [2]. Retail investors on Reddit highlight concerns about rate cuts prioritizing AI investments over job creation [6], potential AI bubble risks from cheap credit [6], and buying opportunities from panic sell-offs [6].

• Monetary policy decisions (rate cuts) may have distributional impacts favoring capital-intensive sectors (AI) over labor markets (per Reddit sentiment [6]).
• The Fed’s shift to prioritize labor market stability over inflation concerns indicates a change in dual mandate focus [1].
• Market expectations for rate cuts have doubled in a week (from ~40% to ~84.9%) [4], reflecting rapid sentiment shift.

• Potential AI bubble formation due to reduced borrowing costs for capital-intensive AI investments [6].
• Fed policy reversal if inflation reemerges, leading to market volatility [2].
• Labor market concerns may persist despite rate cuts [1].

• Lower borrowing costs for consumers and businesses, boosting spending and investment [3].
• Buying opportunities during market panic sell-offs (as per Reddit sentiment [6]).

• Fed Stance
  : Daly supports December rate cut citing labor market weakness [1]; Fed remains divided [2][3].
• Market Expectations
  : ~84.9% probability of a 25-basis-point cut in December [4][5].
• Retail Sentiment
  : Reddit users highlight AI investment prioritization, bubble risks, and buying opportunities [6].
• FOMC Meeting
  : December 9-10, 2025 [3].