Federal Reserve Chair Jerome Powell spoke at a press conference following a meeting of the Federal Open Market Committee on October 29, 2025, in Washington, DC, emphasizing the uncertainty surrounding a potential rate cut in December.
A few weeks ago, Powell hinted that a December rate cut was not guaranteed. Recent statements from his colleagues highlight significant hesitation about the central bank's third consecutive easing of policy during their upcoming meeting on December 9-10.
These developments have led markets to adjust their expectations substantially. Previously, traders anticipated a strong likelihood—at least a 2-to-1 probability—of a quarter percentage point cut. However, according to data from the CME Group's FedWatch tool, it is now regarded as a 50-50 chance.
Krishna Guha, head of global policy and central bank strategy at Evercore ISI, remarked, 'These developments chip away at our confidence the Fed will cut in [December] without giving us any more confidence a skip to [January] is a better bet,' highlighting a mere 55-60% probability of a December cut.
As of Thursday afternoon, the CME tool indicated a 49.4% chance of a rate cut, based on prices from 30-day fed funds futures contracts. These futures suggest a funds rate of 3.775% by the end of 2025, down from its current level of 3.87%, a sharp decline from a 95% probability a month ago.
The shift is attributed primarily to the lack of official data following a recently resolved government shutdown, causing concern among some Fed officials due to incomplete data on the labor market, which appears to be softening, and inflation, which remains above the 2% target. White House press secretary Karoline Leavitt noted that some data, especially for October, may never be released.
Adding to the uncertainty, Boston Fed President Susan Collins, known for her cautious stance, provided an unusually direct assessment. Collins emphasized her reservations about inflation and endorsed holding steady in policy until more economic clarity is achieved.
'Given my baseline outlook, it will likely be appropriate to keep policy rates at the current level for some time to balance the inflation and employment risks in this highly uncertain environment,' Collins stated. 'I see several reasons to have a relatively high bar for additional easing in the near term.'