Will the Fed cut interest rates in December? Here’s what experts are saying.

‘If you’re driving in a fog, you slow down,’ Fed Chair Jerome Powell says

By Greg Robb

Published: Oct. 29, 2025 at 7:35 p.m. ET

Federal Reserve Chair Jerome Powell speaks during a news conference on Wednesday.Photo: Getty Images

The highlight of Fed Chair Jerome Powell’s press conference Wednesday was his report that there were “strongly different views” among his colleagues about what to do in December, and a warning that a rate cut at that meeting was “far from… a foregone conclusion.”

After hearing Powell’s unprompted description about December, traders in derivative markets slashed their expectations of a cut to 67%, from 90% a day ago.

As expected, the Fed did cut rates by a quarter-percentage point, but it was the talk of the outlook for the Dec. 9-10 meeting that dominated the discussion and market reaction.

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A December cut is now a “toss up” said Benson Durham, head of global policy at Piper Sandler. Economists are lining up on both sides of the argument.

Economists at Deutsche Bank and BMO Capital Markets are sticking to their view for another rate cut in December.

Luke Tilley, chief economist at Wilmington Trust, said the Fed will end up cutting, assuming they have the government data. “I think the labor-market data will support a cut,” he said.

Rick Reider, BlackRock Inc.’s chief investment officer of global fixed income, who is on President Donald Trump’s short list to replace Powell, said he saw an increased chance that the Fed may skip a cut in December.

“I get the sense the bar for cutting is probably higher than the market was expecting,” said Jonathan Millar, senior U.S. economist at Barclays. “It is not just about risk management, they would need more than that to warrant an additional cut,” he added.

Powell also suggested that the Fed might pause in December because of a lack of data.

“So in terms of how it might affect December… we just don’t know what we’re going to get. If there is a very high level of uncertainty, then that could be an argument in favor of caution about moving… but we’ll have to see how it unfolds,” Powell said.

“If you’re driving in the fog, you slow down,” he added.

Wednesday also saw the first two-way dissent at a Fed meeting since 2019.

Kansas City Fed President Jeff Schmid dissented in favor of holding rates steady, while Fed governor Stephen Miran, on leave from the Trump White House, dissented in favor of a 50-basis-point cut.

Powell noted that there was a deep divide at the central bank.

Diane Swonk, chief economist at KPMG, said it is going too far to say Powell has lost support of the committee.

“This is a time you should expect dissents. We haven’t seen anything like this since the 1970s,” Swonk said.

It is a legitimate debate of how the Fed should respond when inflation is moving higher and the labor market is weakening, she said. Powell clearly supports more rate cuts while other Fed officials are more worried about inflation.

“There is no slam-dunk answer here.” Swonk said. On top of that, the lack of data makes things foggy and the economy is sending mixed messages.

For instance, the stock market is roaring at the same time that a majority of Americans are unhappy about the economy and are worried about job security and inflation, she said. And consumer spending was strong in the third quarter, even with little job growth.

”The growth numbers suggest we’re nowhere near a recession, but we’re getting pretty close to a payroll recession, and that’s a fairly odd thing,” Swonk said.

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