Fed Chair Jerome Powell tried to put a kibosh on talk of a December cut.
Rate Cut Odds
- November 2: 69.3 Percent
- October 29: 2 Hours Before the FOMC Meeting: 90.5 Percent
- October 24: 91.7 Percent + 4.7 Percent for 50 Basis Points (Total 96.4 Percent)
What Happened?
In the press conference following the October 29 rate cut decision, Powell has stated that another reduction in December is “far from” guaranteed and is not a “foregone conclusion.”
Moreover, there are are differing views within the Federal Reserve regarding the need for another cut in December.
At the meeting, Jeffrey Schmid, dissented. He wanted no change to the target range for the federal funds rate at this meeting. In addition, two non-voting members also expressed an opinion for no December cut.
Fed ‘Chorus’ Comes Out Against Latest Cut
Bloomberg reports Fed ‘Chorus’ Comes Out Against Latest Cut, Citing Inflation
- Three US central bank officials said they did not support a decision to cut interest rates this week, underscoring Federal Reserve Chair Jerome Powell’s warning that another reduction in December is far from guaranteed.
- Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack said they would have preferred to hold rates steady, while Kansas City Fed President Jeff Schmid outlined the reasons for his dissent against the rate cut.
- Fed officials are debating whether to cut rates again in December, with some seeing a need for more easing to support the labor market and others concerned about inflation, and investors still seeing better-than-even odds of a rate cut in December.
The remarks from Logan, Hammack and Schmid were the first salvo in what is likely to be an intense debate over the next six weeks before the central bank’s next policy meeting in December, between officials who see a need for more easing to support the labor market and those who are more concerned about inflation.
“I’d find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labor market will cool more rapidly,” Logan said in remarks prepared for a speech at the conference.
“I think it’s plausible that Powell could face more resistance to a cut than a pause in December,” said Matthew Luzzetti, the chief US economist at Deutsche Bank Securities. “That’s one reason that Powell came out as hawkish as he did, but that’s something we’ll learn more about in the next week or two” as more Fed officials make public comments, he said.
While Logan and Hammack don’t vote on monetary policy this year, they participate in Federal Open Market Committee discussions and will rotate onto the voting panel in 2026. Two Fed officials voted against the decision at this month’s meeting, with Schmid preferring to hold rates steady and Governor Stephen Miran dissenting for a second straight meeting in favor of a larger, half-point cut.
“By my assessment, the labor market is largely in balance, the economy shows continued momentum, and inflation remains too high,” Schmid said in his statement.
“I do think we need to maintain some amount of restriction to help get inflation back down to target,” Hammack said. Bostic, on the other hand, said he “eventually got behind” the decision to cut rates because he believes monetary policy is still “in restrictive territory,” even after the reduction.
“We can’t really signal or forget that inflation is a significant problem, and we have to get that back down to our 2% target,” Bostic said. “I think we can still do it, but with each step, we get closer and closer to neutral in ways that make me uncomfortable.”
The December Meeting
The next meeting is December 10, still over a month away.
But how much data will the Fed have?
Key data for October on jobs and inflation was not collected.
What About November Data?
The BLS reference week for the November jobs report is the calendar week containing November 12, 2025, which is the week of Sunday, November 9th to Saturday, November 15th. This is the standard reference week for the Current Population Survey (CPS) and includes the 12th of the month.
I suspect if the government shutdown lingers through the 15th the BLS would change the reference week to the 16th. However, I suspect the shutdown will be over by then.
But I did not think it would last until November, so who knows?
Pressure on Both Sides
Insufficient staffing at air traffic control facilities caused a second day of widespread delays, as several large airports reported service interruptions. The controllers’ union released a statement on Friday that effectively endorsed congressional Republicans’ approach to ending the shutdown.
Q&A: Obamacare Big Price Hikes Coming. What’s the Shutdown Really About?
In case you missed it, please see Q&A: Obamacare Big Price Hikes Coming. What’s the Shutdown Really About?
Neither Republicans nor Democrats are telling the truth.
Powell trying to decide:
“Should I cut or should I hold”?
https://www.youtube.com/watch?v=xMaE6toi4mk
Atlanta’s gdpnow is at 4 percent. The FED shouldn’t have stopped QT.
The problem with determining odds on anything now is that we have a cultist leader that randomly interferes with major aspects of the economy. From tariffs to aggression in foreign lands, you really never know what to expect ~ other than chaos.
It is a bad business environment for making long term commitments IMO.
If I can’t capture an asset at under 40% of actual value, I’m not interested.
>
I think the record is 35 days, so the shutdown will probably end this week, once Schumer gets the record.
Be that as it may, the interesting thing will be what do the Dec FMOC minutes say once the BLS gets back to reporting? The Fed is literally flying by the seat of their pants.
I’m not sure what the big deal is. I have seen so many commenters here say the BLS data was terrible, biased, corrupt, politically motivated, etc.
If true, why do we care if the BLS doesn’t provide those statistics any more?
The Fed should ease off their focus on the employment half of their dual mandate. This seems obvious. With AI reducing marginal job growth, where are people displaced by AI going to get the same paying jobs?
The AI job drain/recasting of the labor market will run its course and we will be fine. During this transitional period where things take on a life of their own, we should not be so focused on it, we won’t control it. Fed could cut to chase jobs and end up raising inflation to much higher levels.
The AI job drain/recasting of the labor market will run its course and we will be fine.
That is an extremely naive thing to say and something you cannot even begin to comprehend / predict with accuracy at this point in time. And I’m not saying my thoughts on the subject are any better. I just think it’s hilarious that you make such a broad statement as if they’re a matter of fact.
Trump wanting to have lower interest rates is no surprise, he has lived a life of leverage that is rewarded by lower rates. It is his business plan, so he pushes that same plan on the federal operation, again, no surprise as it is a familiar practice for him. In his view it is successful, but for him it was successful because he could declare bankruptcy 4 times, a part of his plan the government cannot implement per the constitution.
Another aspect of recent stimulus is negative efficacy. In 2024 there was stimulus of $1.8 trillion government deficit and associated $1.4 trillion GDP growth. We have past the point where a dollar of stimulus yields more than a dollar of growth.
Lower interest rate removes the immediate consequence of congress taking on additional debt as incremental servicing cost is minimal. If rates were more like normal 5% or 6%, congress would need to consider consequences of high debt much more seriously as it would cost $2 trillion to service $40 trillion debt at 5%. even at low rates, higher debt service costs are baked in the cake.
We have a partially shut down government due to squabbling about spending more money, money we do not have. How ridiculous is that?
No where does the fed have a goal of lowering rates to facilitate government borrowing; they need to step aside and let free market price discovery influence interest rates without their thumb on the scales. If they did that, I doubt lower rates would be in our immediate future.
Seems like we will only know in retrospect. Will the delayed tariff impact effect the holiday shopping season? Inventories will be a mixed bag. Will the usual seasonal hiring just not be the same? We won’t know until the new year. Seems like both the market and the workforce have soft floors and everyone is treading lightly.
There is no such thing as the wisdom of crowds.
Hey look the crowd agrees with you, so your point is clearly erroneous, see how this works?
Powell the adult voice of sense in the playroom of the Trump administration.
Doesn’t seem to be negatively impacting the stock melt-up.
Mish: what – if anything – do you think the Fed should do? Serious question. I don’t have an opinion.
The number one thing, IMHO, the Fed needs to do is update its neutral rate to something a lot more reasonable. With approaching $40T in debt & rising M2, their target rate should not be 2%. It’s a least 2.5% and 3% is a better bet, outside a recession.
Congressionally, a law needs to be passed that bars the Fed from buying MBS & treasuries longer than 5 years. The two things are at the nexus of the housing bubble. The markets & the American people need to know that mortgage rates are going to be based on market treasury yields & not Fed intervention.
zionist-ruled America or the (((Fed))) or (((Wall Street))) are not going to succeed this time. Because no-one is making any real profit selling anything to America – except for the zionist shills placed at the head of EU/Canada/Oceania/Japan corporations and institutions.
You lower interest rates one more time, the fake dollar aka FRNs crashes.
Please be advised.
– zionist-ruled America are not going to succeed this time.
> Why? If America is ruled by them, then how do they lose?
– Because no-one is making any real profit selling anything to America.
> Then “We & They” are all on our own then, because no profit, no sales.
– except for the zionist shills placed at the head of EU/Canada/Oceania/Japan corporations and institutions.
> EU is toast, and will be gone long, long before America. Heck they could be broken up by 2026. Canada is already toast, and simply flailing around now, looking for an escape route, where there is none. Japan is on there way back, as a now firmly entrenched Trading Partner & Like many other Countries, onboard with the way of thinking by America right now.
– You lower interest rates one more time… Please be advised.
> The Rates, can and do, always find their spot. This is never someone making the choice, but rather Markets forcing the choice upon us. The determined choice, will be the one needed to straighten things out, so to speak. If wrong it will be tweaked until it’s not…
The Rates, can and do, always find their spot.
Outside of Fed intervention, sure. Otherwise, no. Come Dec 1, the Fed is going to be purchasing anywhere from $30-70B a month in treasuries from its balance sheet Rolloff.
That’s manipulating the treasury market. Once the Fed made the decision to carry an egregiously high balance sheet, this guarantees that they’re going to have an effect on treasury yields forever, even in the relatively good times that we’re seeing today (i.e., not in a declared recession).
I told you.
The foreign peoples don’t really make money selling to the US because the “money” they get is illegal, unlawful and worthless according to Article 1, Section 10 of the US Constitution.
But their leaders don’t give a shit as long as they get to live like kings.