December 11, 2025 — The Federal Reserve is set to announce its latest interest rate decision today at 2:00 PM Eastern Time, with Chair Jerome Powell’s press conference following at 2:30 PM ET.
While markets widely expect a quarter-point rate cut, the decision comes amid unprecedented divisions within the central bank that could signal turbulent waters ahead for monetary policy.
What to Expect from Today’s Fed Announcement
The Fed is expected to deliver its third consecutive quarter-point rate cut, with the CME’s FedWatch tool showing 89% odds of this outcome.
This 25-basis-point reduction would continue the easing cycle that began earlier this year, but today’s decision is being characterized as particularly contentious given the mixed economic signals facing policymakers.
Market participants will be closely watching three key elements: the rate decision itself, the updated economic projections including the crucial “dot plot” that shows where Fed officials expect rates to go in 2026, and Powell’s press conference where he’ll address the path of future rate cuts.
Unprecedented Division Within the Fed
The Federal Reserve’s 19-member rate-setting committee is sharply divided over whether to lower borrowing costs again.
Some economists predict three Fed officials could vote against the quarter-point cut that Powell is likely to support, which would mark the most dissenting votes in six years.
The split is unusual because it comes from both sides of the debate. Hawks favoring higher rates, including Kansas City Fed President Jeffrey Schmid and potentially St. Louis Fed President Alberto Musalem, are expected to vote against any cut, preferring to keep rates unchanged.
Meanwhile, Fed Governor Stephen Miran will likely dissent for a third straight meeting in favor of a larger, half-point reduction.
William English, an economist at the Yale School of Management and former Fed staff member, captured the challenge facing policymakers: “It’s just a really tricky time. Perfectly sensible people can reach different answers.”
Why the Fed Faces Such a Difficult Decision
The divisions have been intensified by conflicting economic signals. Inflation remains elevated above the Fed’s 2% target, which would typically argue for keeping rates unchanged.
However, the labor market has been weakening and unemployment has risen, conditions that often prompt rate cuts.
David Mericle, chief U.S. economist at Goldman Sachs, expects the Fed to deliver the rate cut “at what will likely be a contentious December meeting.”
Former Cleveland Fed President Loretta Mester confirmed this expectation, noting that recent signals from New York Fed President John Williams, endorsed by Chair Powell, point toward today’s cut.
Analysts Split on 2026 Outlook
While consensus exists for today’s rate cut, analysts are deeply divided on what comes next year.
Some take a dovish view, predicting continued cuts. Luke Tilley of Wilmington Trust forecasts three more cuts at the next three Fed policy meetings due to labor market weakness. T. Rowe Price goes further, predicting rates could fall to 3% or lower in 2026 as labor market conditions deteriorate.
Others favor a more hawkish stance. Loretta Mester hopes the Fed signals that “policy is in a good place and they are going to slow down the cuts” because she’s concerned about inflation stickiness. Berenberg economists believe conditions won’t support another cut until the new year.
The labor market concerns are particularly acute, with analysts noting that outside of healthcare jobs, private-sector job growth has been negative. Additional worries about AI-driven job cuts add uncertainty to future employment trends.
Market Implications
Financial markets could face turbulence if the committee vote reveals deep splits. Fed Governor Christopher Waller has warned that in a 7-5 vote scenario, just one official changing their view could bring a significant shift in Fed policy direction.
Most analysts expect what’s being called a “hawkish cut” today — a rate reduction paired with signals that the Fed will pause further cuts for an extended period.
How Powell navigates these divisions in his press conference could prove as important as the rate decision itself.
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