FOMC Seeing Lowering Rates Further at December Meeting, Projections Closely Watched

02:29 PM EST, 12/09/2025 (MT Newswires) -- The Federal Open Market Committee is widely expected to lower the range for its federal funds rate by 25 basis points from the current range of 3.75% to 4.00%, with markets looking at Federal Reserve Chairman Jerome Powell's post-meeting comment and the updated Summary of Economic Projections for signs of further increases.

Currently, the CME's FedWatch Tool sees an 87.4% chance of a 25-basis point rate reduction to a range of 3.50% to 3.75% and a 12.6% chance of no change.

The FOMC's statement following Wednesday's meeting is due for release at 2:00 pm ET, with Fed Chair Powell's press conference scheduled to begin at 2:30 pm ET.

Division remains among the various Fed officials on the need for a reduction at the December meeting, especially due to the lapse in the release of federal government data because of the partial government shutdown. As a result, there are likely to be dissents in favor of no reduction.

Fed Chair Jerome Powell said on Oct. 29 that a rate cut at the December meeting was not a foregone conclusion, due in large part to the lack of data guidance.

While the federal government has since reopened and some data for September released, more current data for October and November remain under production, with key indicators of inflation and employment for those months and the first look at GDP data for Q3 all set to now be released after the meeting.

Some Fed officials, particularly Fed Vice Chair for Supervision Michelle Bowman and Fed Governors Christopher Waller and Stephen Miran, has strongly advocate for a rate reduction at the December meeting to prevent further labor market slowing and Miran could possibly again dissent in favor a 50-basis point rate reduction.

On the opposite end of the spectrum, Fed Vice Chair Philip Jefferson and Kansas City Fed President Jeffrey Schmid, a voter at the December meeting, suggested that the FOMC should move with caution and weigh the risks of a deteriorating labor market against the possibility that the Fed's efforts to fight rising inflation could adversely impacted if rates are lowered too quickly.

Because a rate reduction at this week's meeting appears likely, the focus turns to the future expectations contained in the updated Summary of Economic Projections.

In the September SEP update, 25 basis points of reduction was expected for 2026 to end that year at a median of 3.4%, followed by one more 25-basis point reduction to a median of 3.1% by the end of 2027. The rate was expected to remain there in 2028, still above the expected long-term rate of 3%.

This week's SEP could indicate a shift toward more reductions if the outlook for unemployment and inflation turns lower.

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