BySimon Moore,
Senior Contributor.
The Federal Open Market Committee has just one scheduled meeting left for 2025, with a decision on interest rates on December 10. Currently markets view it finely balanced as to whether the FOMC cuts, or holds rates steady at their current level of 3.75% to 4%. Generally the Fed is viewed as being on a path to bring rates closer to 3% over 2026, according to the expectations of fixed income markets as assessed by the CME’s FedWatch Tool. Still, the timing is unclear.
The minutes of the Fed’s October meeting will be released on November 19 and may offer further clues as to the monetary policy. Several members of the committee are expected to make the case for lower interest rates.
For example Fed Governor Christopher Waller, who has recently been pushing for lower rates, summarized his view on the economy in a recent speech, “So, what is that data telling us? First, that the labor market is still weak and near stall speed. Second, that inflation through September continued to show relatively small effects from tariffs and support the hypothesis that tariffs are having a one-off effect raising price levels in the U.S. and are not a persistent source of inflation. Accounting for estimated tariff effects, underlying inflation is relatively close to the Federal Open Market Committee’s (FOMC) 2 percent target. Third, despite realized inflation running close to 3 percent and above target for five years, medium- and longer-term inflation expectations remain well anchored. And, lastly, even excluding the temporary effects of the shutdown, growth in real gross domestic product (GDP) has likely slowed in the second half of 2025 from its fast pace in the second quarter.” To make his view clear, Waller’s November 17 speech was titled, “The Case for Continuing Rate Cuts.”
