Jerome Powell, chairman of the US Federal Reserve, during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, DC, US, on Wednesday, Oct. 29, 2025. Al Drago | Bloomberg | Getty ImagesFederal Reserve Chair Jerome Powell faces if not the most difficult challenge of his time in office at least the trickiest in his final months as head of the all-powerful U.S. central bank.Fresh off his surprisingly tough talk Wednesday on the potential for another interest rate cut in December, Powell will have to steer his way through a suddenly contentious atmosphere among policymakers that will make whichever direction the Fed chooses divisive.While it’s not the existential economic threat posed by the Covid pandemic in 2020, it nevertheless indicates a level of peril uncommon for the institution.”December could get messy,” Bank of America economist Aditya Bhave said in a client note. “We still think the Fed won’t cut rates again under Chair Powell. But barring a clear signal in either direction from the data, the December decision will likely be even more contentious than October.”The Fed on Wednesday approved a widely anticipated quarter percentage point rate reduction that took its benchmark rate down to 3.75%-4%. However, Powell warned that another cut in December “is not a foregone conclusion,” something the market was not expecting.While Wall Street economists and strategists were split over whether the committee will in fact approve another reduction at the Dec. 9-10 meeting, they were in agreement that this is a pivotal moment for Powell and the legacy he ultimately will leave when his term runs out in May.”Even in a situation without much additional data due to the shutdown, it can actually make sense to push against market pricing to keep optionality going forward,” wrote Michael Gapen, chief U.S. economist at Morgan Stanley. “A 95% probability assigned to a December cut does not seem consistent with a data-dependent Fed.”Markets reactFor their part, traders weren’t buying the hawkish rhetoric. Fed fun …
