Fed Faces Uncertainty on December Rate Cut Amid Data Blackout and Divided Views

As the U.S. government shutdown drags into November 2025, the Federal Reserve finds itself steering monetary policy with limited visibility. The absence of key economic data has forced policymakers to make decisions with incomplete information. This has heightened the uncertainty surrounding the next interest rate move.

Market participants currently assign roughly a 69% probability to another quarter-point rate cut in December. This came following two consecutive reductions that have brought the benchmark rate down to 3.75%–4%. Yet, inside the central bank, opinions remain sharply divided.

Federal Reserve Chair Jerome Powell cautioned that the possibility of a December rate cut is far from certain. He highlighted what he described as “strongly differing views” within the Federal Open Market Committee (FOMC). His comments suggest growing hesitation after months of easing meant to support a slowing economy.

Within the Fed, several key voices have taken opposing stances. Cleveland Fed President Beth Hammack favors keeping rates steady for now, pointing to persistent inflation pressures that, in her view, outweigh risks to employment. She noted that many business leaders in her district remain anxious about rising prices, suggesting the policy rate may already be nearing a neutral level.

Similarly, Kansas City Fed President Jeff Schmid voted against the latest rate cut. Furthermore Fed Governor Stephen Miran pushed for a deeper half-point reduction. He argued that tighter policy could do more harm than good if the economy loses momentum.

Others, including Chicago Fed President Austan Goolsbee, are still weighing their options. Goolsbee hinted that the central bank has gathered “enough data to keep the labor market supported,” even in the absence of official reports. Meanwhile, Governor Lisa Cook and San Francisco Fed President Mary Daly have not yet signaled clear preferences, reflecting the broader divide within the committee.

Data Blackout Clouds Decision Making

The ongoing government shutdown has halted several key economic reports, including the October jobs and inflation data. Without these updates, the Fed must depend on private-sector estimates and alternative indicators to gauge the economy’s health. Powell compared this environment to “driving through heavy fog,” suggesting that policy adjustments could be delayed until visibility improves.

Economists warn that the missing data complicates efforts to read labor market and price trends accurately. Without fresh figures, the risk grows that policymakers could either overestimate inflation’s persistence or underestimate weakening demand.

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