Jerome Powell, chairman of the US Federal Reserve, addressed the media after a Federal Open Market Committee (FOMC) meeting in Washington, DC, on October 29, 2025. Despite recent jobs data, the likelihood of a December rate cut stays low.
According to the CME FedWatch Tool, markets currently appraise a 35% probability of a quarter-point rate cut next month by the Federal Reserve. This is a slight increase from the previous session's 30% probability, yet still considered relatively low. These odds are calculated using fed funds futures trading.
The current target rate stands between 3.75% and 4.00%. Following the delayed release of the September jobs data, no significant change in expectations was observed. This report was the first nonfarm payroll data since the government shutdown and depicted a mixed U.S. labor market. Although 119,000 jobs were added, surpassing Dow Jones economists' predictions of 50,000, the unemployment rate unexpectedly climbed to 4.4% from 4.3%, the highest since October 2021.
Former Federal Reserve Vice Chairman Roger Ferguson shared his views on CNBC's "Squawk Box," saying, "All those numbers suggest an economy that's still hanging in there. Not a dramatic move one way or the other. People should take note of the slight uptick in the unemployment rate, but labor force participation still looks pretty strong, average hourly earnings certainly look strong, or strong enough. And so, I don't think this sort of tilts the cut decision much one way or the other."
Despite the prevailing cautious stance, some investors remain optimistic that the rise in unemployment leaves room for a potential December rate cut. Fed policymakers closely observe the unemployment rate, even more than the headline job numbers, as it reflects labor market dynamics amid tighter immigration policies.
Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, commented, "A December cut remains possible given continued labor market softness as expressed by the unemployment rate. Weak hard data and close-to-target inflation look set to drive policy going forward, despite recent hawkish noises." Haigh added, "The setup is in place for Powell to continue his risk-management approach to the labor market before his term as Chair expires in May."