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As Fed hawks press their case, traders bet against December cut
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As Fed hawks press their case, traders bet against December cut
Nov 14, 2025 5:09 PM

(Reuters) -As U.S. agencies on Friday began announcing plans for releasing economic data delayed by the government shutdown, a trio of U.S. central bankers reiterated their concerns about inflation while the Fed's most dovish policymaker said economic data in hand argued for another rate cut. 

In the meantime, financial markets placed their bets.

Late Friday, short-term interest-rate futures, the best real-time indication of trader sentiment on Fed policy, reflected a 60% chance that the central bank will not follow its back-to-back rate cuts in September and October with another one in December. 

The market-based odds on that same outcome had been about even just 24 hours earlier, and before that had been heavily in favor of a rate cut for several weeks since the Fed's October 29 decision.

The dueling policymaker views and shifting market bets underscore how hotly contested the decision at the Fed's December 9-10 meeting may be.

And traders' views could just as easily reverse next week when government statistics agencies begin publishing economic data for the first time in a month and a half, and more Fed policymakers, including the influential and dovish Fed Governor Christopher Waller, weigh in with their perspectives.

On Friday, Kansas City Fed President Jeffrey Schmid, Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack largely repeated the hawkish views each had laid out soon after the Fed cut its policy rate last month.

"It's not obvious that monetary policy should be doing more right now," Hammack told the Pittsburgh Economic Club. 

  Logan, speaking at an energy conference put on by the Dallas and Kansas City Fed banks, was similarly circumspect.

"As I look to the December meeting, I think it would be hard to support another rate cut unless we were to get convincing evidence that inflation is really coming down faster than my expectations or that we were seeing more than the gradual cooling that we've been seeing in the labor market."

Schmid, speaking at the same conference, said the rationale behind his dissent on the Fed's October rate cut was also guiding him as he heads toward the December meeting.

"I do not think further cuts in interest rates will do much to patch over any cracks in the labor market - stresses that more likely than not arise from structural changes in technology and immigration policy," he said.

"Cuts could have longer-lasting effects on inflation as our commitment to our 2 percent objective increasingly comes into question."

In contrast, Fed Governor Stephen Miran, in back-to-back television appearances, made a case for another rate cut. Miran joined Schmid in dissenting in October, but in Miran's case his vote was for a bigger rate cut than the quarter-of-a-percentage-point cut that was actually delivered.

Miran, who plans to return to his job as White House economic adviser when his term is up in January, shares President Donald Trump's view that interest rates are far too high. 

After October's rate cut, Fed Chair Jerome Powell said the Fed's moves so far were meant to be insurance against a potential worsening in labor market conditions. But with the government shutdown delaying the publication of key economic metrics, he said, the central bank may need to slow down until the data "fog" clears.

He also noted that there are strong, differing views on the rate-setting committee.

A December rate cut, he said, was "not to be seen as a foregone conclusion - in fact, far from it."

It may have taken a few weeks but on Friday traders seemed inclined to agree - for now.

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