Fed likely to cut rates again, markets watch for guidance

The Federal Reserve is expected to cut its key interest rate by 25 basis points in December amid weak labor data and low inflation.

The rate cut may face limited dissent, with Kansas City Fed President Jeffrey Schmid likely voting to hold rates steady, alongside several “silent dissents” from other regional Fed leaders. Updated projections could show modest growth and low inflation for 2026, though markets expect more aggressive cuts than currently signaled by the Fed.

Global economic factors, including China’s rising consumer inflation but ongoing factory deflation, and the European Central Bank’s likely decision to hold rates, add to the uncertainty. Ahead of the decision, U.S. stocks were mixed, and long-term Treasury yields reached a 16-year high as investors adjust expectations for the end of the rate-cutting cycle.