Likelihood of Federal Reserve December Rate Cut Falls Below 50%
The probability of a Federal Reserve interest rate cut at the December meeting has fallen sharply over the past month, according to CME FedWatch data.
- One month ago: The FedWatch tool showed a 92% chance of a quarter-point rate reduction.
- A week ago: Amid the record-long government shutdown, the probability had fallen below 70%.
- Current update: Following the reopening of the government and delayed economic data releases, the likelihood now stands at 45.9%, indicating that markets are increasingly skeptical about a December cut.
Diverging Opinions Among Fed Board Members
Despite the overall decline in market expectations, there is not unanimous agreement within the Federal Reserve. A few board members have publicly expressed support for an additional rate cut, warning that holding rates steady could risk ongoing inflation pressures.
The Fed faces a delicate balance: supporting economic growth while maintaining inflation control. The evolving probability of a December cut reflects uncertainty in the economic outlook and the impact of delayed data caused by the government shutdown.
Investors and analysts will closely monitor upcoming economic indicators and Fed statements to gauge the path of monetary policy heading into the end of 2025.
Audio Reporting by Mark Oppold for Southeast AgNet.