Rate Cut Odds Rise as Consumer Confidence Slips Ahead of the Federal Reserve’s Final 2025 Meeting
The Federal Reserve Board’s final meeting of the year is just one week away, and expectations for another interest rate cut are gaining momentum. As the Fed returns to its rhythm of analyzing weekly and monthly economic reports, new data is shaping market sentiment—and the latest indicators suggest growing economic caution among consumers.
According to one of the most recent reports, “the consumer confidence index fell in November to its lowest level since April. That’s after chopping around most of the summer and fall.” This drop signals heightened anxiety as households contend with rising costs and shifting financial pressures. The report also revealed that consumers are increasingly uneasy about the near-term outlook, noting that “consumers [were] notably more pessimistic about business conditions six months from now, higher costs and reduced household incomes.”
These indicators are especially significant as the Federal Reserve evaluates whether further rate cuts are warranted to support economic stability entering 2026. Consumer confidence plays an important role in forecasting spending behavior—an essential driver of the U.S. economy. Declining confidence often suggests that households may slow spending, reinforcing the case for monetary policy adjustments.
Market watchers are also paying close attention to CME’s FedWatch tool, which tracks the probability of future rate decisions. As recently as three weeks ago, “CME’s FedWatch tool gave about a 55 to 60 percent chance of a rate cut next week.” But shifting economic conditions have dramatically changed the outlook. The report now notes that “as of this report, that percentage has increased to 85 percent.”
Such a rapid increase reflects mounting expectations that the Federal Reserve will choose to ease interest rates again in response to weakening consumer sentiment and ongoing macroeconomic concerns. Traders and analysts widely view these odds as a strong indicator of the likely outcome of next week’s meeting.
As the countdown to the Fed’s final policy announcement of the year continues, all eyes will remain on economic signals—consumer confidence, cost pressures, and income trends—that are shaping the central bank’s direction. The coming week could set the tone for financial conditions heading into 2026.
Audio Reporting by Mark Oppold for Southeast AgNet.