WASHINGTON, November 16, 2025 – As the Federal Reserve prepares for its December 9-10 policy meeting, hawkish Fed officials signaled caution on further interest rate cuts, while financial markets rapidly shifted expectations, now pricing in a 60% chance that the central bank will hold rates steady.

Diverging Views Among Federal Reserve Policymakers

A trio of U.S. central bankers – Kansas City Fed President Jeffrey Schmid, Dallas Fed President Lorie Logan, and Cleveland Fed President Beth Hammack – reiterated concerns about persistent inflation and suggested that further rate reductions may not be warranted.

• Beth Hammack noted that “it’s not obvious that monetary policy should be doing more right now,” emphasizing structural pressures in the labor market.
• Lorie Logan highlighted the need for convincing evidence of faster-than-expected inflation decline before supporting another cut.
• Jeffrey Schmid cautioned that additional cuts could undermine the Fed’s 2% inflation target, stressing structural changes in technology and immigration as key factors affecting labor market stresses.

In contrast, Fed Governor Stephen Miran, considered more dovish, continued to advocate for additional cuts, aligning with former President Donald Trump’s view that interest rates remain too high. Miran previously dissented on October’s policy move, favoring a larger reduction than the quarter-point cut ultimately delivered.

Market Reactions: Traders Shift Expectations

Short-term interest-rate futures, a real-time measure of trader sentiment, reflect growing skepticism over a December cut, with markets now placing a 60% probability on a policy hold. This represents a significant shift from earlier in the week when the odds were roughly even and had previously favored a rate reduction.

Analysts warn that these expectations could swing again once key economic data delayed by the government shutdown are released. Policymakers, including dovish figures such as Fed Governor Christopher Waller, may influence market sentiment in the coming days.

Federal Reserve Chair Jerome Powell’s Perspective

Following the October rate cut, Fed Chair Jerome Powell emphasized that the moves were intended as insurance against labor market deterioration. He cautioned that with delayed government data, the central bank may need to pause until economic conditions become clearer, stressing that a December cut is “far from a foregone conclusion.”

Implications for U.S. Economic Policy

The debate highlights ongoing tensions within the Fed between hawks focused on inflation control and dovish members advocating additional monetary easing. Traders and policymakers alike are navigating uncertain economic conditions, including labor market trends, inflation pressures, and delayed economic indicators, which will heavily influence December’s rate decision.