Rate Cut Uncertainty Clouds December Fed Meeting

Markets cautiously brace for a potential rate cut as Fed officials shift tone ahead of December’s key policy meeting.

December 2, 2025

JPMorgan’s chief US economist reversed his forecast again, now predicting rate cuts in both December and January, citing shifting data and Fed commentary.
Fed Governor Christopher Waller’s recent remarks supported a December rate cut as a “risk management” move, signaling growing consensus within the Fed.
The November Beige Book described economic activity as largely flat, with mixed signals in consumer spending, hiring, and manufacturing.
CME Group’s FedWatch tool shows an 87.4% chance of a December rate cut, reflecting market anticipation despite lingering uncertainty.

Key Takeaways

A Policy Reversal in Real Time

In a matter of days, Wall Street analysts have flipped their forecasts on what the Fed will do next. Globe St reports that JPMorgan Chase’s top economist Michael Feroli originally called for a December rate cut, walked that back, and now—after Fed Governor Waller’s latest comments—is again projecting back-to-back cuts in December and January.

This rapid reversal mirrors the volatile economic landscape: Treasury yields have retreated, job and inflation data remain inconsistent, and the Fed’s latest communications point to a more dovish tilt than expected.

Beige Book Echoes Economic Ambiguity

The Fed’s November Beige Book painted a picture of an economy treading water. Most districts reported “little or no change” in activity—a theme echoed in recent regional reports showing sluggish growth and uneven commercial real estate trends. Consumer spending weakened overall, though luxury retail held firm. Meanwhile, EV sales slipped as tax credits expired, and manufacturing ticked up slightly—but with concerns about tariffs and trade still looming.

Oxford Economics noted the report “won’t resolve the hawk vs. dove divide,” as even signs of job market cooling—through hiring freezes and attrition—haven’t turned into broader layoffs.

Market Eyes December Decision

With the December 9–10 meeting approaching, markets are heavily favoring a 25-basis-point cut, based on Fed futures data. However, the uncertainty around inflation trends, consumer resilience, and global trade tensions has left room for surprise.

Some, including Capital Economics, even warn of a potential tie vote among FOMC members—a rare and dramatic possibility that underscores just how unclear the path forward is.

What’s Next

The Fed’s next move could shape monetary policy well into 2026. Whether it holds steady or cuts rates this month, officials will need to navigate a complex web of mixed signals and market expectations.

The only certainty? The answer will arrive in ten days.