Fed Officials Deeply Divided Over Prospects for December Rate Cut

Federal Reserve officials are increasingly split over the timing and necessity of a December rate cut, marking one of the most significant internal disagreements during Jerome Powell’s nearly eight-year tenure. The divide centers on whether persistent inflation or a slowing labor market poses the greater threat to the U.S. economy. Some policymakers argue for a December cut, treating it as interchangeable with a potential January meeting, while others caution that delivering a rate cut without clear economic improvement could undermine the Fed’s credibility. Investors have largely priced in a Federal Reserve rate cut at the upcoming December meeting, but the emerging dissent has cast doubt on the likelihood of action. New economic data on inflation and employment may be crucial in resolving the debate. Another option under discussion is combining a December rate cut with revised forward guidance, raising thresholds for subsequent easing steps. This split within the Federal Reserve adds uncertainty to markets, as traders weigh the impact of sustained high rates against expectations for future monetary policy easing. The outcome of this debate will be closely watched by investors assessing risk assets, including Bitcoin and other cryptocurrencies, which are sensitive to shifts in U.S. interest rates.