Will December Interest Rate Cut Happen With Fed Policymakers Decision Divided

The December interest rate cut by the Federal Reserve is now in doubt as the minutes of the Fed’s October meeting reveal a deeply divided committee. Several policymakers expressed strong reservations about further rate cuts in December, with many feeling that a reduction may not be justified given the inflation rate remains somewhat close to the 2% target, despite being above target for some time. Others believe a cut could be appropriate if economic conditions evolve as expected.

The minutes highlight a split in opinion: “several participants” favored a rate cut, while “many participants” leaned toward keeping rates unchanged at the December meeting. The probability of a rate cut in December has dropped significantly according to market signals, with tools like CME’s FedWatch barometer showing around a 30-40% chance, down sharply from near certainty a month ago.

Key points from the minutes include concerns about a softening labor market, inflation dynamics influenced by tariffs, and uncertainty about the timing and magnitude of inflation effects. The Fed emphasized that monetary policy decisions are not on a preset course and will depend on upcoming economic data and the evolving outlook.

In summary, the Fed is divided, and the likelihood of a December rate cut is weakening, reflecting an ongoing balancing act between inflation control and supporting employment amid conflicting economic signals.