*This is an audio transcript of the FT News Briefing podcast episode: *‘Federal Reserve set for divisive final 2025 rate decision’

Victoria Craig Good morning from the Financial Times. Today is Monday, December 8th and this is your FT News Briefing.

European leaders are meeting today to shore up support for Ukraine. And the Fed’s final meeting of the year could feature the most divided rate decision in years. Plus, a look inside the entertainment mega merger that few actually saw coming.

Daniel Thomas Kind of out of nowhere, Netflix has come in, swooped in with this audacious $83bn enterprise value deal to buy one of the most storied and revered studios of old Hollywood.

Victoria Craig I’m Victoria Craig, and here’s the news you need to start your day.

[MUSIC PLAYING]

Ukrainian President Volodymyr Zelenskyy will meet European leaders in London today as they try to rally support for Kyiv, which is under pressure from the White House to agree a peace deal with Russia. The European Commission is pursuing a plan for a quote, reparations loan to Ukraine that would be backed by frozen Russian central bank assets. But there’s mounting frustration at France, which has withheld details about which institution holds the second biggest stash of frozen Russian funds. France has kept the details under wraps, claiming issues of client confidentiality. Belgium wants holdings from other countries — including those in France — included in any reparations plans in order to spread the financial and political risk.

But Paris argues that assets held at commercial banks are subject to different legal obligations than those at Brussels-based securities depository Euroclear, where the main holding of Russian assets are held.

[MUSIC PLAYING]

This week brings the final Federal Reserve meeting of the year and economists are expecting one last cut to America’s benchmark interest rate. But there are deep divisions within the Central Bank about the future path of rate cuts, especially as political pressure on the Fed continues. So what’s on tap for the week ahead?

The FT’s US economics editor, Claire Jones, joins me now. Hi, Claire.

Claire Jones Hi, Victoria.

Victoria Craig So what is the latest chatter on this December rate decision?

Claire Jones So, in the run-up, there’s been a lot of uncertainty about what’s gonna happen at the final Fed meeting of the year. There’s some people on the FOMC who wanna prioritise inflation, who don’t wanna see more cuts.

There’s others that are concerned about the labour market and the US economy that would like to see more action. It does look as though those who want to see more action will win out. And investors and economists are now forecasting the third quarter point cut in a row to come on Wednesday.

Victoria Craig And that division that you’re talking about at the Fed, how is that likely to impact this month’s decision?

Claire Jones I think that’s a very good question. So we polled this week a selection of academic economists. It’s done on behalf of the FT by the University of Chicago’s Booth Clark Center. And what they found this time was that the vast majority of respondents expect to see dissent at the Fed, around 60 per cent expect two dissents. And a significant minority of about a third are seeing three or more dissents. Now, the last time we saw four dissents was way back in 1992 in the early years of Alan Greenspan and we haven’t seen three dissents since 2019. So dissent on this sort of scale is really quite rare.

Victoria Craig Yeah, that’s a pretty stark statistic there. And I wonder how much politics is playing into this division at the Fed.

Claire Jones I think there’s two elements to it, really. I mean, one is that it’s very tricky to really know what Fed officials should be prioritising right now. A lot of the survey respondents, we’ve got almost half of them saying they should prioritise the inflation-fighting part of the Fed’s mandate over the labour market.

But Fed officials are concerned that after years of real, real strength, the US labour market may now be weakened. And so there is this sense in which the economic situation right now is very difficult, where we have inflation still running close to 3 per cent, which is way above the Fed’s 2 per cent goal. But there are a lot of signs that the labour market is weakening, too. So that’s one element of it.

Another is that some see the more hawkish comments by regional Fed presidents as an attempt to show that they’re not just gonna lay down and cut interest rates as aggressively as Trump’s pick for Fed chair is probably gonna want them to. In recent weeks, it’s emerged that the frontrunner is Kevin Hassett, who’s the head of the National Economic Council, which is based at the White House and is seen as a very close ally of the US president.

Victoria Craig So politics is on one hand on the other, there’s this data fog issue that chair Powell mentioned at the last Fed meeting. And that’s of course due to the government shutdown, which we’ve also talked with you quite a lot about. How long is that gonna be a problem for the Fed? How long is their visibility gonna be muted?

Claire Jones I think that’s totally right and that’s another area of disagreement, what the data’s showing and whether they actually have enough data. And there’s a lot of private sector information on the labour market. A lot of Fed officials don’t feel like there’s so much on inflation. And they’re going into this meeting with the Bureau of Labor Statistics, having said that they’re not gonna be able to publish October data for consumer price index inflation, so there’s a real blind spot here. It’s likely to last for at least a month or two, I think, before the BLS is able to get fully back to normal and start publishing data on the normal schedule.

Victoria Craig We will be watching for all of those things. Claire Jones, the FT’s US economics editor. Thank you.

Claire Jones Thanks, Vicki.

[MUSIC PLAYING]

Victoria Craig President Trump’s administration is accelerating a power shift away from investors and into boardrooms. The president is considering enacting curbs on voting influence of BlackRock, Vanguard, and State Street. Those are giant asset managers whose index funds typically own as much as 30 per cent of most listed companies. Those holdings give asset managers vast influence over shareholder votes about how companies are managed.

The administration is also weighing limits on influential proxy advisers that can sway votes at annual meetings. Executive orders on such moves could come within weeks, according to a person familiar with the administration’s considerations.

[MUSIC PLAYING]

A company that made a name for itself by snail mailing DVDs in red envelopes is set to take control of one of Hollywood’s most celebrated studios. Netflix’s $83bn takeover deal of Warner Bros Discovery has been the talk of Tinseltown since it was announced on Friday. But what does the mega merger mean for the future creation and delivery of global entertainment, news and sports?

The FT’s global media editor, Dan Thomas, joins me now. Hi, Dan.

Daniel Thomas Hi, there. How you doing?

Victoria Craig Good, thanks. Thanks for being here.

So at the beginning of this bidding war for Warner Bros Discovery, Netflix was kind of seen as a sort of long shot spoiler, wasn’t it? How did we get here?

Daniel Thomas Yeah, I mean it’s worth recapping, really. ‘Cause I mean, if you go back even a week, this was a deal which Paramount — backed by the Ellison family, you know, deep pockets, huge links into the Trump administration and into the technology sector — was really seen as a deal for them to lose. I think most analysts gave Netflix, relatively scan chance of securing it and kind of out of nowhere, Netflix has come in, swooped in with this audacious $83bn enterprise value deal to buy one of the most storied and revered studios of old Hollywood.

Victoria Craig What does Netflix’s victory in this fight mean for Paramount? Because, like you said, it had been seen as the frontrunner. How does this change its position in the market now?

Daniel Thomas So, Paramount’s play was always to buy Warner Bros and to buy into their HBO Max streaming platform, which gives them a great position to go forward and create a really good, big global player. Without Warner Bros Discovery, they’re looking much smaller now and that’s gonna be a problem thing going forward. Most households can only really have maybe three or four subscriptions maximum, right?

So the market can only really have half a dozen streamers going around the world. And Paramount is now at risk of being a sub-scale compared to the rest of them.

Victoria Craig Warner Bros Discovery owns many well-known brands like TNT and CNN. What does the future of those look like now?

Daniel Thomas Within the next few months, they’re gonna take a lot of those legacy network assets, including some of the sports stuff with TNT Sports and they’re gonna separate them into a different company.

So, actually, Netflix won’t necessarily have the contractual obligations around that. For Netflix, this is giving them one of the most incredibly deep and meaningful libraries of content and IP going forward. You know, this is everything from Citizen Kane to Game of Thrones, you’ve got Harry Potter franchise coming back.

For Netflix, this is super important ‘cause Netflix has seen . . . one of the problems I’ve seen recently is that almost they’ve been a victim of their own success, ‘cause they’ve been bringing in lower-cost subscription tiers where viewers have to watch a bit of advertising in order to get their programs, but they’ve been incredibly popular.

And so the premium side of things is losing numbers to their own sort of stablemate. So what HBO content, you know, think about Sopranos, think about this really premium content, White Lotus — it gives them an opportunity to have a really strong HBO premium layer, which really supports top-end subscriptions.

Victoria Craig So Hollywood is really worried about job cuts and the future of movie theatre releases, if this deal does go through, which many want regulators to block. So how do those concerns sort of fit into this overall picture?

Daniel Thomas Well, Netflix have committed to the theatrical distribution of Warner Bros Discovery. This sort of deal breeds fears among the traditional entertainment industry. Even actors, right? Actors like to be in cinemas. That’s the kind of one of the fundamental things about these big stars and the movies that they sign up to. So I think it’s been important that Netflix was clear that they will keep the cinema distribution network very present, very important to their future strategy. But at the same time, they will inevitably, over time, probably look to bring more movies quicker on to their streaming platform, just because that’s their fundamental model.

Victoria Craig And as with any deal, shareholder and regulatory approval is required. So, is there any risk that this does not get the green light?

Daniel Thomas Clearly, the Board of Warner Bros Discovery has picked to go with Netflix. So they are clearly saying that they’re quite confident that the regulatory process will be straightforward and this would tend to disagree. I think there’s a pretty strong company being created in the content distribution and production space here.

I think there’s greater confidence there that they will get through this. And you can see that in the break fee Netflix have offered, you know, more than $5bn if this still doesn’t go forward. So, they’re on the hook for some pretty big numbers if it doesn’t go their way.

Victoria Craig The FT’s global media editor, Dan Thomas, thanks for breaking this all down for us.

Daniel Thomas Thank you so much.

[MUSIC PLAYING]

Victoria Craig You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

[MUSIC PLAYING]

Robert Armstrong News Briefing listeners, this is Rob Armstrong. You may know me as the journalist who coined the term Taco Trade, or as the man who writes both about markets and men’s clothes for the Financial Times. Hopefully, though, you know me from the Unhedged podcast. Twice a week, fellow FT markets maven, Katie Martin and I make sense of what’s happening in finance.

We pull apart the big stories, moving markets from interest rates and corporate drama to geopolitical shocks in investor manias. Katie and I go beyond the who, what and where to give you the why.

Listen to Unhedged wherever you get your podcast. And while you’re at it, subscribe to my newsletters, Unhedged and Unhedged chart of the week via FT.com/newsletters.