Fed Split Widens as December Rate Cut Hangs in the Balance

Released on November 19, the minutes of the Federal Reserve's October 28–29 FOMC meeting show growing disagreements among policymakers regarding the course of interest rates. Though many members now lean towards keeping the federal funds rate stable for the balance of 2025, a minority remains open to yet another decrease in December should economic circumstances worsen. With October's 10-2 vote to lower interest rates by 25 basis points, emphasizing a split—some against any cut, others wanting a deeper one—the record reveals "strongly differing views," hence revealing a committee at odds on how to treat slowing job growth against ongoing inflation.

Competing risk assessments underlie these disputes. While some Fed officials believe that the biggest threat is a weakened labor market—slowing job growth and a rising unemployment rate—others caution that inflation is not falling toward the 2% objective rapidly enough. Arguments cover the present monetary policy stance, with strongly varying views on whether it is tight enough to control inflation without producing pointless economic pain. Notably, Chairman Powell remarked that rates were less tight than they were previously in the year, but not lax enough to be deemed accomodative.

Beyond interest rates, the FOMC almost unanimously decided on December 1, 2025, to stop quantitative tightening, leaving the Fed's balance sheet at $6.6 trillion and transferring maturing mortgage-backed securities into shorter-term Treasury notes. A better financial situation and lowering trade headwinds will help the staff's viewpoint to mean the US economy might grow more strongly than previously predicted through 2028. Markets remain wary, therefore assigning only a 42–43% chance of a December cut as focus shifts to the long-delayed September employment report, vital information for the Fed's next decision.