Fed Officials Signal Openness to December Rate Cut as Odds Jump Higher
Momentum is building toward a Federal Reserve rate cut in December after two of the central bank’s most influential voices signaled support for lowering rates. New York Fed President John Williams—one of Chair Jerome Powell’s closest policy partners and a permanent voter on the FOMC—hinted that the current policy stance may not need to remain this tight for much longer. Williams said there is “room for a further adjustment in the near term,” a clear message that another rate cut is very much on the table.
San Francisco Fed President Mary Daly echoed the same sentiment in a separate interview with the Wall Street Journal, saying she supports cutting rates at the upcoming December 10 meeting. Daly does not vote this year, but she has long aligned with Powell’s policy approach, adding weight to the idea that leadership may be building a broader consensus around easing.
Markets reacted quickly. The probability of a December rate cut jumped to roughly 85%, up from around 50% just days before. Investors immediately moved into Treasuries, pushing down yields and strengthening expectations that borrowing costs—especially for mortgages—may hold steady or move slightly lower into the new year.
Not everyone at the Fed is convinced, however. Boston Fed President Susan Collins and St. Louis Fed President Jeff Schmid have voiced caution, warning that inflation could still reaccelerate. Their concerns highlight the internal divide: some policymakers see slower hiring and cooling price pressures as enough reason to cut, while others think more patience is needed to ensure inflation continues on a steady downward path.
This upcoming meeting carries outsized importance because the Fed will be making a major decision without fresh inflation data. The government shutdown wiped out the October CPI report, leaving policymakers with fewer tools than normal to assess real-time conditions. That makes comments from Fed leaders and market reactions even more influential than usual.
For mortgage rates, a December cut would help keep yields from climbing and could prevent the housing market from losing momentum during a fragile stretch. Rates recently touched their lowest point in a year, and with demand still sensitive to even small shifts, the Fed’s next move could determine how stable borrowing costs remain through the end of 2025.
Economists warn that the outlook can still change quickly. Any unexpected jump in inflation, a rebound in job growth, or stronger opposition from additional Fed officials could weaken the case for a cut. But for now, the tone inside the central bank is leaning noticeably toward easing, and the market has already priced in most of that expectation.
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