December Fed Meeting 2025: Rate Cut Expectations Fade as Inflation Concerns Rise

Speculation over a possible interest rate cut at the December Federal Reserve meeting is losing steam as policymakers signal growing caution. After two rate cuts earlier in the year, stronger inflation pressures and signs of a stabilizing labor market are prompting Fed officials to reconsider further easing. What once looked like a likely 25-basis-point reduction is now far from guaranteed.

Market sentiment has shifted noticeably. According to CME FedWatch data, the probability of a December rate cut has fallen to 43%, down sharply from 70% before the previous policy meeting. This decline reflects the market’s doubts about whether the Fed is prepared to loosen monetary policy again in 2025 amid persistent inflation and mixed economic indicators.

Fed Chair Jerome Powell and regional leaders such as Boston Fed President Susan Collins have emphasized the need for patience. Collins, who supported both cuts earlier this year, has expressed concern about inflation’s “stickiness” and noted that the labor market appears to be stabilizing rather than weakening. Her remarks, combined with delayed economic reports caused by the recent government shutdown, have contributed to uncertainty surrounding the Fed’s next move.

Kansas City Fed President Jeff Schmid has taken an even firmer stance, arguing that inflation must remain the central focus. Schmid, who dissented on holding rates steady in October, warned that further cuts could worsen inflation rather than support economic growth. Unless upcoming data shows meaningful improvement, he is unlikely to back additional easing in December.

The crypto market has reacted quickly to the Fed’s shifting tone. Bitcoin, which previously surged on expectations of continued rate cuts, slipped below $100,000 as traders reassessed their outlook. With rate-cut odds falling, volatility across digital assets has increased.

As investors await clearer economic data and official Fed guidance, uncertainty remains high. The outcome of the December meeting will shape financial markets and the cryptocurrency sector heading into 2026.