Last of the Fed cuts?

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Last of the Fed cuts?

Fed serves second rate cut after hikes, backs off previous forecast

Powell dangles uncertainty over future cuts

Federal Reserve chair Jerome Powell and President Donald Trump (Getty)

Federal Reserve Chair Jerome Powell recently “dangled uncertainty” over future interest rate cuts, indicating that a further reduction in rates in December 2025 is “far from a foregone conclusion”.

Following the Fed’s decision to cut interest rates for the second time this year at its October 2025 meeting, Powell cautioned against assuming a continued aggressive easing path. Key aspects of his message include:

A “Far From” Certain December Cut: Powell explicitly stated that another rate cut at the December meeting is not guaranteed, a comment that caused stocks to turn negative while Treasury yields and the dollar jumped.
Data Dependence: Powell emphasized that future decisions would be made on a meeting-by-meeting basis and depend on incoming economic data. The current federal government shutdown has delayed the release of key data sets, adding to the uncertainty and potentially arguing for caution.
Internal Division: The decision to cut rates by 25 basis points in October was not unanimous, with two dissenting votes among the FOMC members (one favoring a larger cut, the other no cut at all), reflecting a growing division within the central bank on the appropriate policy path.
Market Reaction: Despite the October rate cut, markets were initially underwhelmed by Powell’s cautious tone, as investors had largely priced in the probability of a continuous series of cuts.

In essence, Powell’s comments were aimed at managing market expectations and stressing that the Fed maintains a flexible, data