Will the Federal Reserve cut interest rates this week?

Federal Reserve Chair Jerome Powell is expected to push through another quarter-point interest-rate cut this week.

Why are some Federal Reserve policymakers hesitant about rate cuts?

Some policymakers are hesitant due to growing unease that inflation remains too high, despite the economic data scarcity.

What is the impact of the government shutdown on Fed decisions?

The government shutdown has created a scarcity of recent economic data, complicating the Fed's policy debate on inflation and employment.

Home / Business and Economy / Fed Rate Cut Looms Amid Inflation Fears

Fed Rate Cut Looms Amid Inflation Fears

7 Dec, 2025

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Summary

Federal Reserve Chair Powell likely to approve rate cut despite inflation concerns.
Policymakers show division on further interest rate reductions.
Government shutdown created a scarcity of recent economic data for decision-making.

Federal Reserve Chair Jerome Powell is expected to proceed with another quarter-point interest-rate cut this week, despite reservations from some fellow policymakers regarding elevated inflation. This anticipated move comes after the Federal Reserve implemented a second reduction in October, largely influenced by a downturn in the US labor market observed during the summer months.

The lack of fresh economic data, stemming from a government shutdown that impacted October and November, has amplified the division among Fed officials. The most recent inflation figure available to policymakers dates back to September, a report unlikely to significantly alter the ongoing policy discussions.

Despite market doubts in mid-November, New York Fed President John Williams indicated room for a near-term reduction, leading markets to assign a high probability to a December rate cut. Economists anticipate a pause thereafter, with further reductions potentially occurring in 2026.