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.

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