When the Federal Reserve’s Federal Open Market Committee meets on December 9 and 10, it will mark the last opportunity for a 2025 rate cut—and possibly one of the most divided votes in years. As of Thursday, November 6, market watchers put the likelihood of a 25-basis-point cut at 68.7%, with a 31% chance of no change, according to the CME Group’s FedWatch Tool.
Those odds could shift as the Fed weighs a sharp 175% year-over-year surge in job-cut announcements reported by Challenger, Gray & Christmas. The latest labor data rattled investors, helping push down the yield on the 10-year Treasury Note as markets sought safer ground.
Predicting the Fed’s next move once seemed more straightforward. For decades, votes on the federal funds rate typically drew near-unanimous support, with at most a single dissenter. That consistency has vanished. The committee’s recent meetings have revealed sharper divisions over how best to balance the Fed’s dual mandate of maximum employment and price stability.
The challenge now lies in those competing goals. When employment softens, the central bank generally leans toward lowering short-term rates to spur business activity and hiring. Yet easing too far, too fast risks stoking inflation—an outcome that could force a later reversal.
At the end of October, Fed Chair Jerome Powell cautioned that “a further reduction in the policy rate at the December meeting is not a foregone conclusion.” His comments echoed uncertainty across the central bank’s leadership about whether another cut is warranted.
Chicago Federal Reserve President Austan Goolsbee reflected that hesitation in remarks to CNBC, noting that potential weakness in the job market would become visible sooner than signs of rising inflation.
“That makes me even more uneasy,” he said, “with front-loading rate cuts and counting on the inflation that we have seen in the last three months just to be transitory and assume that they’re going to go away.”
Those reservations come amid an increasingly divided committee. Two FOMC members dissented at both the October and July meetings—the first time in 30 years with more than one opposing vote. In October, Stephen Miran favored a deeper 50-basis-point cut rather than a 25-basis-point cut, while Jeffrey Schmid wanted to leave the rate unchanged.
What happens in December now hinges on how the Fed interprets a murky economic landscape that shows signs of both cooling jobs and persistent inflation pressures—an equation with no simple answer as the final meeting of 2025 approaches.
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