Rate Cut or Hold? December 10 FOMC Meeting Now a Toss-Up

Interest rate cut predictions are basically a toss-up right now. Amidst major economic uncertainty and the data hole that the 40-day U.S. government shutdown left, analysts are struggling to for a clear consensus on the Federal Reserve’s next move. 

Federal Open Market Committee members have been publicly divided on what to make of the next interest rate decision on December 10. 

While members like Mirran have called for a more aggressive rate cut to counteract signs of economic slowdown — others like Goolsbee adopt a more poised stance, claiming that inflation remains a concern.

And this growing concern about inflationary pressures seems to be gaining traction across the Committee. Today, Fed President Neel Kashkari told Bloomberg News that inflation is still “too high”, as the latest data shows core inflation climbing back to 3%.

This statement comes only a few weeks after Kashkary claimed a third rate cut could be on the table for the Fed, and other FOMC members who were previously dovish, like San Francisco Fed President Mary Daly, have also begun to temper their tone. 

Stack 10% More on Your First BTCC Deposit

Start Trading

CME FedWatch Shows a Toss-up

The CME FedWatch tool, often the most used gauge for interest rate expectations, is now showing a clear divide. While the platform showed a 95.5% chance of a rate cut in December, that probability has since dropped sharply.

The previous favoritism toward a 0.25% cut at the end of the year has all but vanished, with CME FedWatch now showing only a 50.7% chance that it will happen. 

This divide makes the December 10 FOMC meeting far more consequential. Even at the start of the year, when the Fed refused to cut rates, markets were pricing on these decisions with accuracy, creating a somewhat stable environment for risk assets. Traders correctly anticipated the Fed’s reluctance to ease early in the year, and later bet (accurately) on the two rate cuts delivered in September and October.

But now, the uncertainty in the Fed is spilling over to markets like crypto. With no clear indication of what the next step is, cryptocurrency and stock markets are far more volatile, as investors fend for themselves amid uncertainty.