Divided Federal Reserve expected to cut interest rates

Published: Wednesday, December 10, 2025 at 1:48 pm

Federal Reserve Poised to Cut Interest Rates Amidst Internal Debate

Washington, D.C. – The Federal Reserve is anticipated to lower its benchmark interest rate for the third consecutive time this Wednesday, according to economic analysts. The move, aimed at stimulating job growth, comes despite some internal disagreement among policymakers.

Experts predict the Federal Open Market Committee (FOMC) will approve a quarter-percentage-point cut, reducing the interest rate to a range of 3.5% to 3.75%. This decision is not expected to be unanimous, mirroring the previous two rate cuts.

The primary goal of lowering interest rates is to encourage consumer spending by making borrowing, such as car payments and credit card balances, more affordable. This is intended to provide a boost to the economy during a period of slower hiring. However, this action carries the risk of exacerbating inflation, which has been trending upward.

Federal Reserve Chairman Jerome Powell has previously acknowledged the challenge, stating that the Fed has "one tool" to address both employment and inflation.

While some FOMC members have expressed reservations about further rate cuts, there appears to be a growing consensus in favor of the move. Market sentiment, as measured by the CME FedWatch Tool, indicates an 87% probability of a rate cut, a significant increase from 30% last month.

Bill English, former director of monetary affairs at the Fed and now a Yale professor, suggests the FOMC may cut rates but then hold them steady for the near future. He anticipates a "hawkish cut," where the action is taken but future cuts are unlikely.

Adding complexity to the situation is the lack of recent economic data due to the government shutdown. October's figures were largely missed, and November's have been delayed, making it more difficult to assess the current economic landscape.

BNN's Perspective: The Federal Reserve's decision to cut interest rates reflects a delicate balancing act. While the move could provide a much-needed boost to employment, it also risks fueling inflation. The lack of recent economic data further complicates the situation, making it crucial for the Fed to carefully monitor the impact of its actions and remain flexible in its approach.

Keywords: Federal Reserve, interest rates, FOMC, rate cut, inflation, employment, Jerome Powell, economic data, government shutdown, monetary policy

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