Federal Reserve Chair Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee at the Federal Reserve on Oct. 29, 2025 in Washington, DC. Alex Wong | Getty ImagesFederal Reserve Chair Jerome Powell wasn’t kidding a couple weeks ago when he said a December rate cut wasn’t in the bag.Recent remarks from Powell’s colleagues point to plenty of apprehension over whether the central bank should deliver its third consecutive easing of policy when it meets Dec. 9-10.As a result, markets have recalibrated their expectations. Whereas traders as recently as a few days ago were pricing in at least a 2-to-1 probability of a quarter percentage point cut, that’s now flipped to a coin toss, according to futures markets readings tabulated by the CME Group in its FedWatch tool.”These developments chip away at our confidence the Fed will cut in [December] without giving us any more confidence a skip to [January] is a better bet,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a note. “This leaves us still seeing a [December] cut more likely than not but only 55-60 per cent.”As of Thursday afternoon, the implied probability of a rate cut was at 49.4%, according to the CME gauge that uses prices on 30-day fed funds futures contracts to interpolate probabilities for rate moves. Futures prices pointed to a funds rate of 3.775% by the end of 2025, compared to the current level of 3.87%.A month ago, the market was assigning a 95% probability of a reduction.So what changed? Primarily, uncertainty at a time when the official data flow came to a halt due to the now-resolved government …
