It’s now anyone’s guess whether the Federal Reserve will cut interest rates again at its December monetary policy meeting.
As of Thursday afternoon, the odds were roughly 50-50 on whether the central bank will hold rates steady next month or ease by another 25 basis points, as it did in September and October. That’s according to the CME FedWatch tool, which tracks futures contracts tied to the Fed’s benchmark federal funds rate.
Over the past two months, Fed policymakers set course in a decidedly dovish pattern, reflecting the prevailing belief that interest-rate intervention was needed to stimulate a sagging labor market.
But policy hawks concerned about rising inflation have increasingly risen to the fore, with Kansas City Fed President Jeffrey Schmid voting against a rate cut in October. More recently, Fed officials Beth Hammack and Austan Goolsbee indicated growing unease with further monetary easing.
On Wednesday, Boston Fed President Susan Collins joined the cast of hawks, saying during a bankers conference in Boston that she sees “several reasons to have a relatively high bar for additional easing in the near term.”
Those reasons, according to Collins, include her views that “broad financial conditions are a tailwind, not a headwind, for economic growth,” and that monetary policy is “still mildly restrictive.”
“Against this backdrop, providing additional monetary support to economic activity runs the risk of slowing — or possibly even stalling — the return of inflation to target,” she said.
Collins’ publicly disclosed shift in monetary stance is notable, as she has held the party line in the Fed’s majority decisions thus far in 2025.
Another Fed official whose views have evolved is Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, who announced his impending retirement this week.
In late October, Bostic revealed he was initially against a rate cut at that month’s Federal Open Market Committee (FOMC) meeting, but he “eventually got behind” the majority decision. But during a speech at the Atlanta Economics Club this week, he said he’s now in favor of holding rates steady “until we see clear evidence that inflation is again moving meaningfully toward its 2% target.”
“Moving policy near or into accommodative territory risks pumping fresh blood into the inflation beast and [threatens] to untether the inflation expectations of businesses and consumers,” Bostic said. “I simply don’t think that is the proper trade-off we should contemplate right now.”
On the other end of the hawk-dove scale is the newest Fed governor, Stephen Miran, who dissented at both the September and October FOMC meetings in favor of jumbo rate cuts of 50 basis points. During a Monday interview with CNBC, Miran reiterated his call for outsized easing, citing “gradual softening” in the labor market.
“Failing new information that’s made me update my forecasts, looking out in time, yeah, I would think that 50 is appropriate, as I have in the past, but at a minimum 25,” Miran said.
Data uncertainty
According to a recent Reuters poll, 84 of 105 economists polled predict a quarter-point rate cut in December. The other 21 expect no change to the target range of the fed funds rate, which is currently set between 3.75% and 4%.
The wild card in the upcoming Fed rate decision will be the potential availability of official government data on inflation and labor market conditions now that the longest federal shutdown in U.S. history is over.
Trump administration officials have given mixed signals on the availability of Bureau of Labor Statistics (BLS) data covering the shutdown-induced blackout period.
White House Press Secretary Karoline Leavitt said Wednesday that the BLS’s consumer price index and jobs reports for October would “likely never” be released and could be “permanently impaired.”
But National Economic Council Director Kevin Hassett told reporters Thursday that while the October BLS household survey wasn’t completed and “we will never know what the unemployment rate was in October,” payroll figures from last month “will be able to be calculated.”
“The September jobs report has already been cooked, and we expect we might get that next week,” Hassett added.
As for the October CPI inflation report, Barron’s reports that it will likely be delayed until early or mid-December, according to economists’ projections. Meanwhile, the November CPI report is currently scheduled for release at 8:30 EST on Dec. 10, which is 5.5 hours before the Fed announces its next rate decision.
