Experts Warn Americans: Expect One Rate Cut — But Not More Soon
Federal Reserve divisions point to December cut while signaling uncertainty for future reductions.
An important message has been delivered by experts to Americans: “Expect a reduction in interest rates this week. But do not expect more anytime soon.” According to Axios, this is the most likely outcome of the Federal Reserve Board meeting that will take place next Wednesday.
This comes after an unusually turbulent six weeks that revealed deep divisions among officials in the Federal Open Market Committee (FOMC), who will meet again this week.
Fed Committee Shows Deep Policy Divide
Members from both wings of the committee — hawks and doves — have been unusually frank about their conflicting views on whether interest rates should be cut.
However, the final signals from both sides, as well as Fed leadership, all point to a kind of agreement: that the FOMC is likely to cut interest rates by a quarter percentage point on Wednesday, while indicating a high ceiling on when it might do so again.
A large group of monetary policy hawks — including many presidents of regional Federal Reserve banks — spent most of November defending the case for keeping rates unchanged and waiting for clearer evidence of labor market deterioration before cutting further.
A similar group of doves — three U.S. governors appointed by Trump — called for deeper rate cuts in an attempt to approach the neutral rate that does not restrict economic activity, amid signs of labor market weakness.
Leadership — Fed Chair Jerome Powell, Vice Chair Philip Jefferson, and New York Fed President John Williams — appeared to stand in the middle.
In the final days before the Fed’s self-imposed blackout period, during which officials remain silent ahead of the meeting, the outlines of a compromise were clear: a rate cut in December paired with a message that further adjustments in 2026 are uncertain.
Williams said in a speech last month that he sees “scope for further near-term adjustment” in rates.
Fed Leadership Signals Balanced Path Forward
San Francisco Fed President Mary Daly, who does not have a formal vote this year but has been an influential voice on the committee, also supported a December rate cut.
Officials who were more cautious about further cuts — including current voters Chicago Fed President Austan Goolsbee and Boston Fed President Susan Collins — indicated that it is not certain they would oppose the move.
But how far the committee will go on Wednesday to rein in expectations for additional cuts in 2026 remains in question.
David Mericle, Goldman Sachs’ U.S. Chief Economist, wrote in a Monday morning note: “Powell is likely to emphasize that the ceiling for future cuts has risen and explain why some participants opposed cutting rates.”
He added: “However, the FOMC cannot bind itself too tightly — especially when two jobs reports have been delayed — because a rate cut in January may well be appropriate.”
