US Fed News Today: Here’s What to Expect From FOMC December Meeting

Wall Street is not wondering if the Fed will move today. It is wondering how nervous Jerome Powell will sound when he announces what is widely seen as the third straight rate cut of 2025. Futures are pricing in roughly 85 to 90% odds of another 25 basis point reduction at the December FOMC meeting today, which would take the federal funds target from 3.75-4.00% down to 3.50-3.75%.

Let’s break down with this blog what is expected from today’s meeting, why the Fed is unusually divided this time, and what investors in US and global markets should watch for in Powell’s statement and projections.

Where Fed Policy Stands Going Into Today

Since September, the Fed has already delivered two rate cuts:

• In September 2025 it lowered the target range to 4.00-4.25%, the first cut since 2024, citing labour market concerns even as inflation stayed above 2%.
• On October 29 it cut again by 25 basis points to 3.75-4.00%, while stressing that a December move was “not a foregone conclusion” and highlighting uncertainty around the outlook.

If the Fed goes ahead with a third 0.25% cut today, that will take the total in 2025 to three cuts, putting policy near the 3.50-3.75% level that many economists had pencilled in as the year end target.

What Markets and Analysts Expect Today from FED Meeting

Most traders and a large share of economists are in the same camp for this meeting:

• Futures and FedWatch style trackers show about 87-90% odds of a 25 basis point cut today.
• Coverage across global markets, from Asia to the Gulf, also frames this week as the Fed’s “third rate cut of the year” rather than a coin flip.

At the same time, there is a small minority that thinks the Fed should pause here. Nomura, for instance, recently argued for a December hold and only two cuts overall in 2025, pointing to sticky inflation and hawkish recent remarks from some officials. Although, they too reversed their position and now expect a 25 basis point cut, joining the consensus

Think of it this way:

• Base case: 0.25% cut today.
• Small possibility: No cut, which would shock markets and likely hit risk assets in the short term.

An Unusually Divided Fed

The split inside the Fed is real, not just media noise.

• In October, the vote already showed tension, with one member wanting a larger 50 basis point cut and another preferring no cut at all.
• Recent previews describe “sharp divisions” over how far and how fast to keep easing. Doves worry about a softening labour market, while hawks are wary of inflation that is still above target and complicated further by tariffs and supply side issues.

What this likely means for today:

• The committee may still deliver the third cut but
• The statement and Powell’s tone could stress that future cuts are not guaranteed and remain data dependent
• The “dot plot” for 2026 might still show only one cut next year, signalling a slower path than markets hope for

For investors, the vote split and dots could matter almost as much as the headline decision.

Key Things to Watch in Powell’s Press Conference

1. How he describes the labour market
   
   • October JOLTS data show openings at 7.67 million, well above forecast, but hiring is weak and layoffs have climbed to the highest level since early 2023.
   • If Powell leans hard on labour softness, that supports the easing case.
2. His language on inflation
   
   • Headline inflation has come down from the 2022 peak but remains above the 2% target, with tariffs and a messy data backdrop after a long government shutdown muddying the picture.
   • Any hint that inflation could re-accelerate will be taken as a sign that the bar for more cuts is higher.
3. Guidance for 2026
   
   • Earlier projections suggested only modest further easing in 2026, around one to two cuts. If the updated dots show a lower end 2026 rate or a wider dispersion of views, it will reinforce how divided the Fed is on the medium term path.

Why This Matters for Investors

• A 0.25% cut lowers the global risk free anchor and is usually supportive for equities, especially rate sensitive and small cap names.
• US yields and the dollar reaction will influence flows into emerging markets, like India. A very cautious Powell could cap the rally, while a confident tone on inflation progress may boost risk appetite.
• For borrowers and homebuyers in the US, three cuts in 2025 increase the odds of lower borrowing costs in 2026, although banks may not pass everything through immediately.

Bottom line: markets are heavily leaning toward a third rate cut today, but the real story is how divided the Fed sounds on what comes after. For investors, the nuance in Powell’s words may move prices more than the 0.25% headline.

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