Fed splits ahead of key December meeting as rate-cut debate grows

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The clock is ticking.

And all eyes are on the scoreboard.

With less than two weeks to go before the Federal Reserve meets to decide whether to cut interest rates for the third time this year, it appears the central bank’s policymakers are more divided than they have been in years, if not decades.

Members of the Federal Open Market Committee and other Fed officials have entered the quiet period before the Dec. 9-10 meeting.

But they have, for the most part, been anything but quiet on whether to cut the benchmark Federal Funds Rate again to lower the cost of short-term borrowing.

An increasing number of Fed officials have voiced concern about tariff inflation and adjacent higher prices, and have said they favor holding rates steady.

An almost equal number point to the weakening in the labor market and have urged another rate cut in December.

And still others, including Fed Chair Jerome Powell, have remained mum.

Mary Daly, head of the San Francisco Reserve Bank, told The Wall Street Journal in an exclusive interview that the unusual level of disagreement among Fed officials reflects genuine uncertainty, not dysfunction.

Daly, often seen as an ally of Powell, said that the central bank would be guilty of being engaged in groupthink if “we were all agreeing right now,” she said. “Our charge wasn’t to have consensus.”

Fed splits into three camps over monetary policy

The Fed appears to be splitting into three camps: dovish, hawkish, and undecided.

Policymakers are weighing both sides of the central bank’s dual mandate: stable prices and maximum employment.

Balancing that mandate is delicate and risky:

• Lower interest rates support hiring but can fuel inflation.

• Higher rates cool prices but can weaken the job market.

October Fed interest-rate cut was expected

The Fed’s quarter-percentage-point cut to a 3.75% to 4.00% benchmark Federal Funds Rate in October aimed to make short-term borrowing cheaper, potentially spurring spending and shoring up weakness in the employment numbers.

But Fed Chair Jerome Powell knocked back expectations of a December interest rate cut in a press conference following the Oct. 29 FOMC vote.

More Federal Reserve:

• Next Fed interest-rate cut could slide into 2026

• Fed’s Miran pivots on interest-rate cut push for December

“Far from it,’’ he told reporters.

Recently released minutes from the October FOMC meeting showed robust discussion between dovish and hawkish viewpoints.

Daly calls for December interest-rate cut

The odds of a December interest-rate cut have rebounded sharply.

Traders are pricing in an 84.9% chance of a quarter-percentage-point cut Nov. 25 from less than 30 percent the previous week, according to the CME Group’s FedWatch tool.

Related: Fed official ignites December rate cut bets

Daly said the Fed shouldn’t hold off on cutting rates now out of fear it may need to reverse course later.

“I’m not willing to assume our hands are tied next year” in a way that either forecloses the option to cut rates further if the economy weakens more abruptly or to raise rates “if that’s what’s needed,” she said.

Here’s a December interest-rate cut scorecard

The government shutdown has left the Fed operating with a delay in accessing leading economic indicators.

According to The Wall Street Journal, here’s a scorecard of what Fed officials have said, or not said, about a December interest-rate cut.

Fed Board of Governors

• Fed Chair Jerome Powell, unclear

• Vice Chair Philip Jefferson, unclear

• Vice Chair Michelle Bowman, cut

• Governor Michael Barr, pause

• Governor Lisa Cook, unclear

• Governor Stephen Miran, cut

• Governor Christopher Waller, cut

Reserve bank heads (voting)

• John Williams, New York, cut

• Susan Collins, Boston, pause

• Austan Goolsbee, Chicago, pause

• Alberto Musalem, St. Louis, pause

• Jeffrey Schmid, Kansas City, pause

Reserve bank heads (non-voting)

• Beth Hammack, Cleveland, pause

• Neel Kashkari, Minneapolis, pause

• Lorie Logan, Dallas, pause

• Anna Paulson, Philadelphia, cut

• Mary Daly, San Francisco, cut

• Raphael Bostic, Atlanta, pause

• Thomas Barkin, Richmond, unclear

Related: Next Fed interest-rate cut could slide into 2026

This story was originally published by TheStreet on Nov 25, 2025, where it first appeared in the Fed section. Add TheStreet as a Preferred Source by clicking here.