The bond market indicates an 87% chance of a December Fed interest rate cut, but conflicting trends and divisions among officials may lower those odds. A quarter-point cut would bring the target federal-funds rate to 3.50%-3.75%. Analysts expect more cuts, given the unclear economic picture and recent uptick in the unemployment rate.

Fed officials are divided on the need for further rate cuts, citing a cooling job market and sticky inflation. Disruptions from the government shutdown have delayed the release of data on inflation and jobs. Analysts predict more dissents in the upcoming December meeting, with some officials favoring a larger rate cut and others opposing any change.

Market expectations for a December rate cut gained momentum after a slight uptick in the unemployment rate. Analysts see good reason for the Fed to ease policy before 2026, but Fed Chair Powell has emphasized that a rate cut is not a “forgone conclusion.” The outcome of the December meeting remains uncertain, with analysts expecting at least two dissents and a possible “hawkish cut” signaling a high bar for future cuts. Bond market indicates an 87% chance of Fed rate cut in December. Fed officials divided on rates due to job market cooling and inflation concerns following government shutdown. Analysts predict Fed may pause in 2026 if rate cuts happen next week, with rates currently in a neutral range. Bank of America forecasts two more rate cuts in 2026, citing upcoming Fed leadership change. Fed officials expected to release interest rate projections in December with minimal changes from September.

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The bond market indicates an 87% chance of a December Fed interest rate cut, following a turbulent month of fluctuations. Fed officials are grappling with mixed signals from a slowing job market and persistent inflation, exacerbated by data gaps from the recent government shutdown.: December US Fed Meeting: A Rate Cut Looks Likely, but So Do Growing Divisions