As the Federal Reserve approaches its high-stakes December 9-10, 2025 meeting, U.S. economic policy has rarely seemed so fraught with uncertainty or internal division. What was once seen as a near-certain cut in interest rates has become a coin toss, with policymakers split over whether persistent inflation or a weakening job market poses the greater threat to the nation’s economic health. The stakes are high: the decision could shape borrowing costs for millions of Americans and set the tone for the U.S. economy in the coming year.
This sharp division within the Fed’s 19-member interest-rate setting committee, reported by The Washington Post and Associated Press, reflects a deeply uncertain outlook. Multiple factors are fueling the debate, from the continued effects of tariffs and artificial intelligence to shifts in immigration and tax policies. According to Luke Tilley, chief economist at M&T Bank, “It’s reflective of a ton of uncertainty. It’s not surprising at all that there’s a wide divergence of opinions.”
On one side, a vocal group of regional Fed presidents, including Susan Collins of Boston, Raphael Bostic of Atlanta, Alberto Musalem of St. Louis, and Jeffrey Schmid of Kansas City, have sounded the alarm about persistent inflation. Collins told AP, “In all of my conversations with contacts across New England, I hear concerns about elevated prices.” She argued that keeping the Fed’s key rate at its current level—around 3.9%—would help bring inflation back under control. Schmid echoed these concerns, noting, “When I talk to contacts in my district, I hear continued concern over the pace of price increases. Some of this has to do with the effect of tariffs on input prices, but it is not just tariffs—or even primarily tariffs—that has people worried. I hear concerns about rising health care costs and insurance premiums, and I hear a lot about electricity.”
On the other side, some policymakers are more concerned about the labor market’s fragility. Fed governor Christopher Waller, speaking in London, argued for a rate cut, citing sluggish hiring and the risk of a downturn. “The labor market is still weak and near stall speed,” he said. Waller also dismissed the idea that inflation’s persistence alone justifies keeping rates high: “You can’t just sort of say it’s been above target for five years, so I’m not going to cut. You got to give us better answers than that.”
Complicating matters further is the unprecedented disruption of economic data caused by the recent government shutdown. The Bureau of Labor Statistics (BLS) announced that the October jobs report will not be released independently; instead, employer survey data for October will be combined with November’s and released in mid-December—after the Fed’s meeting. The crucial household survey, which determines the unemployment rate, could not be retroactively collected for October, meaning there will be no official unemployment rate for that month. This marks the first time in the 77-year history of the survey that such a gap has occurred, according to the New York Times.
The last available jobs report covers August, and the most recent inflation data is from September. The September jobs data, scheduled for release just before the Fed’s meeting, is expected to show a modest gain of about 50,000 to 55,000 jobs and an unchanged unemployment rate at 4.3%. However, October’s data is expected to reveal negative job growth, largely due to more than 100,000 federal workers leaving payrolls under a deferred resignation program in late September. With so many missing puzzle pieces, policymakers are forced to rely on incomplete information—a fact that has only heightened the committee’s divisions.
Market sentiment has shifted dramatically in recent weeks. According to CME Fedwatch, the odds of a December rate cut have plummeted from nearly 94% a month ago to a coin-flip 50-50 as of mid-November. This uncertainty has spilled over into financial markets, contributing to stock market declines and adding to the sense of economic unease.
Fed Chair Jerome Powell, who has often described the central bank as “data dependent,” poured cold water on the prospect of another rate cut after the October 29 meeting. He described it as “not a foregone conclusion—far from it.” The prospect of a divided vote is real: Krishna Guha, an analyst at Evercore ISI, told AP that a decision to cut rates could see as many as four or five dissenting votes—an almost unprecedented level of disagreement. The last time four officials dissented was in 1992, under Chair Alan Greenspan. Christopher Waller addressed this directly, saying, “People who are accusing us of [group think], get ready. You might see the least group think you’ve seen … in a long time.”
Former Kansas City Fed president Esther George suggested that consensus could still form if new data for October and November show the economy shedding jobs. “Registering a dissent is a hard decision, and I think you’re going to find people that are speaking today that wouldn’t follow through with a vote in that direction,” she said. “I think you’re going to find enough consensus, whichever way they go.”
All of this is unfolding against a backdrop of political pressure. President Donald Trump has been especially vocal in his criticism of Jerome Powell. At the U.S.–Saudi Investment Forum on November 19, Trump declared, “He’s got some real mental problems. There’s something wrong with him. It’s just ridiculous. I’ll be honest, I’d love to fire his a. He should be fired.” Trump has repeatedly described Powell as “grossly incompetent” and criticized the $4 billion Federal Reserve headquarters renovation budget, contrasting it with his own building projects. He urged Treasury Secretary Scott Bessent to “work on” Powell and threatened, “If you don’t get it fixed fast, I’m going to fire your a, OK?”
Trump’s pressure campaign is rooted in his belief that interest rates are too high, contributing to elevated borrowing costs for homes and cars. According to AP, this has fueled a widespread perception that the cost of living is too high, a sentiment echoed in recent polls and cited by several Fed officials in their public remarks. Trump’s criticisms are nothing new—he has frequently called Powell “stupid” and “too late Powell”—but the timing and intensity of his latest comments have added another layer of tension to an already fraught policy debate.
Meanwhile, the Fed’s internal debate is unlikely to be resolved by new data before the meeting. The next major releases—November’s jobs report and the October employer survey—are scheduled for after the December vote. The Consumer Price Index for October remains unscheduled. In the absence of fresh data, the committee will have to make its decision based largely on September figures and its own best judgment about the risks ahead.
With the economy at a crossroads and the central bank’s unity in question, all eyes are on the Fed’s December meeting. The outcome will signal not just the future path of interest rates, but also whether America’s top economic policymakers can find common ground in a moment of historic uncertainty.
