The latest news on the Federal Reserve’s December 2025 rate cut reveals a growing split among Fed officials and increasing uncertainty in the markets. Most recently, the odds of a rate cut in December have dropped to about 50%, signaling a near coin toss on whether the Fed will reduce rates again after its October cut. Market expectations have fallen sharply from near certainty a month ago to about even odds now, largely driven by mixed signals on inflation and the labor market.
Despite the October cut of 25 basis points to a range of 3.75% to 4.00%, the Federal Open Market Committee (FOMC) remains divided. Some officials, including Fed Chair Jerome Powell, have expressed caution and highlighted that a December cut is not a foregone conclusion. Others oppose further cuts due to persistent inflation, which has remained stubbornly above the Fed’s 2% target for years, and limited conclusive economic data exacerbated by a government shutdown.
Key officials like Susan Collins, Boston Fed President, and Raphael Bostic from the Atlanta Fed have publicly opposed another rate cut at the upcoming meeting. They cited the resilience of economic growth, elevated inflation, and the risk that further easing might accelerate inflation. On the other hand, Fed governor Stephen Miran advocates for more aggressive cuts, proposing a 50 basis point move in December to counteract the gradually softening labor market.
Economic forecasts highlight the uncertainty as well. Goldman Sachs maintains a moderately optimistic view of a December cut, pointing to the Fed’s desire to support the cooling labor market without overly risking inflation resurgence. Conversely, analysts from Nomura and others believe the Fed may pause this year-end to evaluate the full impact of prior cuts before acting again, potentially postponing cuts until early 2026.
From a market perspective, the reaction to this wavering outlook has been notable. Currency traders are closely watching labor market reports, inflation data, and Fed signals. The fluctuating probability of a December rate cut has caused volatility in the U.S. dollar and influenced risk assets, including cryptocurrencies, which are sensitive to liquidity conditions affected by monetary policy.
In conclusion, the December Federal Reserve rate decision remains highly uncertain, reflecting deep divisions within the Fed and an economy balancing slow labor growth with persistent inflation. Market participants should prepare for either a modest rate cut or a pause, with significant attention to incoming economic data that will influence the Fed’s final call. This ambiguity will likely sustain volatility in Forex, crypto, and broader financial markets through the end of 2025.
