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Federal Reserve officials were sharply divided over whether to deliver another rate cut at the Dec. 10–11 meeting, minutes from the Oct. 28–29 FOMC gathering showed Wednesday, underscoring rising uncertainty after a weeks-long government data blackout and lingering inflation risks.
At the October meeting, the Committee lowered the fed funds target range by 25 basis points to 3.75%–4.00%, its second cut of the year. But the minutes described “strongly differing views” on the next step: many participants favored October’s reduction, some said they could have supported either a cut or a hold, and several opposed lowering rates. The divide reflects mixed signals on growth and prices, as well as the temporary suspension of key economic releases during the federal shutdown that left policymakers with fewer hard data points.
Recent public remarks have reinforced the rift. Some officials argue further easing would do little to offset structural labor-market frictions and could endanger progress on inflation, while others back additional cuts—up to 50 bps in December—to cushion softening employment trends.
Rate-cut odds for December have fallen sharply alongside the hawkish rhetoric and data fog. Market pricing now implies roughly a 29% probability of a 25 bps reduction next month, down from about 94% a month earlier, as traders await delayed labor and inflation reports to clarify the trajectory.
What it means for markets
• Policy path: The bar for a December cut has risen; a pause is the base case unless incoming data show clear cooling in jobs and inflation.
• Data sensitivity: Thursday’s delayed September nonfarm payrolls and subsequent releases will carry outsized influence on both pricing and guidance.
• Risk assets: Equities and crypto remain vulnerable to a “higher-for-longer” rate narrative, while front-end yields and the dollar may stay firm until the data picture improves.
The Fed ended October with a cut, but the path ahead is contested. Without decisive evidence of slowing inflation and demand, officials appear inclined to wait for clearer data before easing again.
