US Federal Reserve December 2025 Rate Cut: Odds Drop to 49.4% Amid Hawkish Signals

The U.S. Federal Reserve’s December 2025 rate cut odds have fallen to 49.4%, down from 67% earlier in the week, as hawkish comments from officials like Boston Fed President Susan Collins signal growing caution on further easing. This shift, reflected in CME FedWatch data, comes amid persistent inflation pressures and a divided FOMC, with markets now pricing in a funds rate of 3.775% by year-end.

Hawkish Turn: Collins and Others Push Back on December Cut

Fed Chair Jerome Powell’s October 29 press conference set the tone, noting “strongly differing views” within the committee and a “growing chorus” to “at least wait a cycle” before another reduction. Boston Fed President Susan Collins echoed this on November 13, describing the economy as “in a good place” and expressing reticence on December easing, citing inflation risks. Kansas City Fed President Jeff Schmid dissented from October’s cut, advocating restraint.

Short-term futures now imply a 49.4% chance of a December cut, with the funds rate at 3.75%-4.00% after October’s 25bps reduction. The September dot plot showed a 10-9 split for two more cuts in 2025, but recent remarks suggest only one may materialize.

• Current Odds: 49.4% for December cut (from 67%).
• FOMC Divide: 10-9 for easing; growing hawkish chorus.
• Funds Rate: 3.75%-4.00%; next meeting December 10-11.

Economic Backdrop: Sticky Inflation and Labor Stability

Inflation remains above the 2% target at 2.7% core PCE, with unemployment steady at 4.1%. The government shutdown’s data delays—postponing CPI and PCE—complicate decisions, but Powell indicated reliance on alternative sources. Labor market softening, with 150,000 jobs added in October, supports cuts, but upside inflation risks from tariffs temper urgency.

Market Impact: Volatility for Assets and Crypto

The odds drop has pressured risk assets, with Nasdaq -1.2% and S&P 500 -0.9% on November 13. Bitcoin held $106,500 (+2.5% daily), but altcoins like Ethereum dipped 2.2% to $3,385 amid $184 million ETF outflows. A no-cut scenario could test BTC $100K support, while easing boosts equities.

2025 Fed Rate Prediction: One to Two More Cuts

Federal Reserve rate prediction for 2025: One to two more cuts, ending at 3.25%-3.75%. Bull catalysts: Labor weakness; bear risks: Inflation testing 4.00% peak.

In summary, Fed’s hawkish tilt drops December 2025 rate cut odds to 49.4%, signaling caution on easing amid inflation risks—watch for volatility in assets.