Updated: December 2, 2025<\/p>\n
The U.S. Federal Reserve enters the final stretch before its December 9\u201310 FOMC meeting with three big storylines converging:<\/p>\n
markets are heavily pricing in another interest rate cut,the Fed has just\u00a0ended\u00a0its quantitative tightening (QT) program, andpolicymakers are visibly split, raising the risk of unusually contentious votes in the weeks ahead.\u00a0 [1]<\/a><\/p>\n Below is a complete rundown of today\u2019s key Federal Reserve news, forecasts, and analysis \u2014 and what it all might mean for rates, markets, and your money.<\/p>\n Key TakeawaysPolicy rate today:\u00a0The Fed\u2019s target range for the federal funds rate stands at\u00a03.75%\u20134.00%\u00a0after quarter\u2011point cuts at the September and October meetings.\u00a0 [2]<\/a>QT is over:\u00a0As of\u00a0December 1, 2025, the Fed has\u00a0stopped shrinking its balance sheet, ending its latest QT program after more than\u00a0$2.2 trillion\u00a0in securities runoff.\u00a0 [3]<\/a>December cut odds near 90%:\u00a0Futures markets and major Wall Street banks now see a\u00a0high probability (around 85\u201388%)\u00a0of a\u00a025\u2011basis\u2011point rate cut\u00a0at the December 9\u201310 meeting.\u00a0 [4]<\/a>Forecasts keep drifting lower:\u00a0BofA now expects a December cut plus\u00a0two more cuts in mid\u20112026, while J.P. Morgan sees a December cut followed by a \u201cfinal\u201d move in January.\u00a0 [5]<\/a>Internal divisions are widening:\u00a0Reuters reports that as many as\u00a0five of 12 voting FOMC members\u00a0are skeptical of more cuts, setting up one of the most divided Fed votes in years.\u00a0 [6]<\/a>Regulation back in focus:\u00a0Fed Vice Chair for Supervision\u00a0Michelle Bowman\u00a0testifies today on supervision and regulation and has signaled possible\u00a0changes to the Basel III capital plan\u00a0that could benefit banks of all sizes.\u00a0 [7]<\/a>Where Fed Policy Stands Right NowThe current rate setting<\/p>\n The Fed\u2019s main policy rate \u2014 the\u00a0federal funds rate\u00a0\u2014 is currently targeted in a range of\u00a03.75% to 4.00%. That\u2019s the result of\u00a0two 25\u2011basis\u2011point cuts\u00a0at the September and October FOMC meetings, which followed a long period of rates above 5%.\u00a0 [8]<\/a><\/p>\n While those cuts marked a clear pivot toward easier policy, Fed officials have been careful to signal that\u00a0December is \u201cnot a foregone conclusion\u201d, stressing that further moves depend on incoming data on inflation and jobs.\u00a0 [9]<\/a><\/p>\n QT officially ends<\/p>\n On the balance\u2011sheet side, the Fed has just crossed a major milestone:\u00a0QT is over.<\/p>\n On\u00a0October 29, 2025, the FOMC announced that it would\u00a0cease the runoff of its securities holdings starting December 1, 2025.All principal payments from Treasury and agency securities will now be\u00a0rolled over or reinvested, effectively freezing the size of the balance sheet (apart from normal drifts in other liabilities).\u00a0 [10]<\/a>Since QT began in June 2022, Fed securities holdings have fallen by\u00a0more than $2.2 trillion, reducing their size from\u00a0about 33% of nominal GDP to about 20%.\u00a0 [11]<\/a><\/p>\n Fed officials say they stopped QT because\u00a0reserves are getting close to the \u201cample\u201d level\u00a0needed for their current interest\u2011rate control framework. Recent stresses in money markets \u2014 including heavier use of the Fed\u2019s Standing Repo Facility and swings in the reverse\u2011repo program \u2014 highlighted the risk of pushing QT too far.\u00a0 [12]<\/a><\/p>\n Markets Are Betting Heavily on a December Rate CutFutures: odds near 85\u201388%<\/p>\n Across the Fed\u2011watching universe, the message is consistent:\u00a0a December cut is now the base case.<\/p>\n The\u00a0CME FedWatch Tool\u00a0shows traders pricing in roughly an\u00a085\u201388% chance\u00a0of a\u00a025\u2011basis\u2011point cut\u00a0at the December 9\u201310 meeting.\u00a0 [13]<\/a>An Investopedia analysis notes that markets swung from expecting a pause to seeing a cut as more likely, after dovish comments from key officials and delayed government data muddied the economic picture.\u00a0 [14]<\/a>Wall Street forecasts: cluster around a cut<\/p>\n Two big shifts in bank research have reinforced that narrative:<\/p>\n Bank of America (BofA)\u00a0now expects the Fed to\u00a0cut in December, then deliver\u00a0two more quarter\u2011point cuts in June and July 2026, ultimately lowering the policy rate to\u00a03.00\u20133.25%. The bank explicitly ties its more aggressive easing call to\u00a0anticipated changes in Fed leadership, not just the data.\u00a0 [15]<\/a>J.P. Morgan\u00a0has reversed its earlier call for \u201cno move until January\u201d and now likewise expects a\u00a025\u2011basis\u2011point cut in December, followed by a\u00a0\u201cfinal cut\u201d in January.\u00a0 [16]<\/a><\/p>\n Most large brokerages now sit in the \u201cDecember cut\u201d camp, with\u00a0Morgan Stanley and Standard Chartered\u00a0among the few still forecasting no change this month.\u00a0 [17]<\/a><\/p>\n Leadership politics: Hassett\u2019s shadow<\/p>\n Rate expectations are also being shaped by\u00a0politics around the Fed chair job:<\/p>\n Kevin Hassett, the White House economic adviser, has emerged as the\u00a0frontrunner\u00a0to replace Jerome Powell when his term expires in May 2026, according to a Bloomberg\u2011sourced Reuters report.\u00a0 [18]<\/a>Currency and rates strategists interviewed by Reuters see Hassett as\u00a0more dovish\u00a0and potentially\u00a0bearish for the dollar\u00a0over time, given his bias toward faster cuts, even though they still expect the broader FOMC to constrain any one chair.\u00a0 [19]<\/a><\/p>\n BofA\u2019s economists explicitly say that their expectation of\u00a0additional cuts in 2026\u00a0is driven by a\u00a0change in Fed leadership, underscoring how personnel politics is now baked into rate forecasts.\u00a0 [20]<\/a><\/p>\n Inside the Fed: Dissent, Blackout, and a High\u2011Stakes December VoteAn unusually divided committee<\/p>\n A striking theme in recent coverage is just how\u00a0fractured\u00a0the FOMC has become.<\/p>\n Reuters reports that\u00a0up to five of the 12 voting members\u00a0are skeptical of further cuts, while a group of Board governors in Washington favor additional easing to support a slowing job market.\u00a0 [21]<\/a><\/p>\n Fed Governor Christopher Waller has warned that the upcoming meeting could show\u00a0three or more dissents\u00a0if the committee cuts again \u2014 something that has happened only a handful of times since 1990.\u00a0 [22]<\/a><\/p>\n The debate is sharpened by:<\/p>\n Stalling progress on inflation\u00a0at the Fed\u2019s 2% goal,Softening job growth, andA\u00a0historic government shutdown\u00a0that delayed key data (like the September employment and inflation reports), forcing policymakers to lean on partial or older information.\u00a0 [23]<\/a>Political pressure on the Fed\u2019s toolkit<\/p>\n The Fed\u2019s tools themselves are under unusual scrutiny:<\/p>\n U.S. Treasury Secretary\u00a0Scott Bessent\u00a0recently criticized the Fed\u2019s\u00a0\u201cample\u2011reserves\u201d framework, saying the multi\u2011facility system (with standing repo and reverse\u2011repo tools) has become overly complex and is \u201cfraying\u201d as the balance sheet nears its new smaller size.\u00a0 [24]<\/a>He and some Fed regional officials argue that the massive balance sheet risks distorting the yield curve and blurring the line between monetary and fiscal policy \u2014 even as most Fed officials see the system as efficient and self\u2011stabilizing.\u00a0 [25]<\/a><\/p>\n Add to that the question of\u00a0Fed independence\u00a0under a potentially more politically aligned chair, and the December decision becomes as much about institutional credibility as about 25 basis points.<\/p>\n Regulatory Front: Bowman\u2019s Testimony and Basel III Flexibility<\/p>\n Today\u2019s main\u00a0official Fed event\u00a0is not a rate speech but\u00a0bank regulation.<\/p>\n Bowman\u2019s priorities before Congress<\/p>\n Fed Vice Chair for Supervision\u00a0Michelle W. Bowman\u00a0appears today before Congress in a hearing on \u201csupervision and regulation.\u201d According to her prepared testimony and the accompanying\u00a0Supervision and Regulation Report, she plans to focus on:\u00a0 [26]<\/a><\/p>\n The\u00a0current health of the banking sector,Progress on her priorities for\u00a0efficiency, safety and soundness, and financial stability, andThe Fed\u2019s approach to making regulation more\u00a0effective and accountable.<\/p>\n Bowman, a former community banker, was confirmed in June as the Fed\u2019s top bank regulator and is widely seen as more\u00a0industry\u2011friendly, with an agenda that includes\u00a0easing\u00a0certain post\u2011crisis rules where she believes they overshoot.\u00a0 [27]<\/a><\/p>\n Possible changes to the Basel III capital plan<\/p>\n Fresh reporting today from regulatory\u2011focused outlets indicates that Bowman has signaled the Fed may\u00a0revise its Basel III \u201cendgame\u201d proposal\u00a0to \u201cmore granularly differentiate\u201d capital requirements and\u00a0extend benefits to banks of all sizes\u00a0\u2014 not just the very largest institutions.\u00a0 [28]<\/a><\/p>\n In practical terms, that could mean:<\/p>\n Lighter capital surcharges for some\u00a0regional and mid\u2011size banks,Tweaks to the risk\u2011weighting of certain assets, andPotentially more flexibility in how banks support lending and market\u2011making, particularly in the Treasury market.<\/p>\n With the Fed having just ended QT \u2014 which affects reserve levels and bank liquidity \u2014 any shift in capital rules will be closely watched for its impact on\u00a0credit availability\u00a0and\u00a0financial\u2011stability buffers.<\/p>\n End of QT: Why It Matters for Markets and the Economy<\/p>\n Even though QT\u2019s formal end took effect yesterday, markets are still digesting what it means.<\/p>\n From runoff to reinvestment<\/p>\n Under the new regime:<\/p>\n Treasury and agency principal payments are\u00a0fully reinvested, so the Fed\u2019s securities holdings should stabilize around\u00a0$6.5\u20136.6 trillion, rather than shrinking further.\u00a0 [29]<\/a>Money\u2011market conditions had already hinted that reserves were no longer \u201cplentiful,\u201d with higher repo rates and more frequent Fed facility usage. Ending QT is meant to\u00a0lock in \u201cample\u201d reserves\u00a0and avoid the kind of funding squeeze that hit markets in 2019.\u00a0 [30]<\/a><\/p>\n Commentary from banks and asset managers frames the decision as broadly\u00a0supportive for risk assets: less balance\u2011sheet runoff means less upward pressure on Treasury yields over time and a structurally more liquid environment for bonds and credit.\u00a0 [31]<\/a><\/p>\n Interaction with rate cuts<\/p>\n Crucially, ending QT\u00a0does not\u00a0mean policy is suddenly loose:<\/p>\n The Fed is still running\u00a0positive short\u2011term real rates\u00a0\u2014 and is only contemplating\u00a0gradual\u00a0cuts.However, a December rate cut\u00a0on top of\u00a0a QT halt would mark a clear pivot from \u201ctightening and shrinking\u201d to \u201ceasing and holding,\u201d a combination that many see as\u00a0bullish for bonds, equities, gold, and other duration\u2011sensitive assets.\u00a0 [32]<\/a><\/p>\n Crypto\u2011focused outlets, for example, are already touting the end of QT as a potential\u00a0catalyst for digital assets, arguing that more stable liquidity and looming rate cuts could support a new cycle \u2014 though they also caution that weak market depth and volatility make outcomes highly uncertain.\u00a0 [33]<\/a><\/p>\n How Today\u2019s Fed Story Hits Households and InvestorsBorrowers: mortgage and loan rates<\/p>\n While the Fed has cut short\u2011term rates and ended QT,\u00a0long\u2011term yields are not moving in lockstep:<\/p>\n The\u00a010\u2011year Treasury yield\u00a0jumped back above 4.0% early this week, reversing last week\u2019s drop.The\u00a030\u2011year yield\u00a0climbed toward the upper end of its recent 4.5%\u20135.0% range.\u00a0 [34]<\/a><\/p>\n Mortgage watchers report that\u00a030\u2011year fixed mortgage rates\u00a0have also pushed higher again, hovering around the\u00a0low\u2011 to mid\u20116% range, erasing much of the recent relief. Analysts emphasize that\u00a0Fed cuts don\u2019t automatically translate into lower long\u2011term or mortgage rates; those depend more on inflation fears, supply of Treasuries, and global risk appetite.\u00a0 [35]<\/a><\/p>\n Savers: savings and CD yields likely to drift lower<\/p>\n On the other side of the ledger, a December cut would likely\u00a0push savings yields down:<\/p>\n Investopedia notes that another quarter\u2011point cut would pressure\u00a0high\u2011yield savings and CD rates, with top savings APYs likely slipping from around\u00a04\u20135%\u00a0as banks re\u2011price in line with the lower policy rate.\u00a0 [36]<\/a><\/p>\n Locking in multi\u2011year CDs before the Fed moves is one strategy many personal\u2011finance commentators are highlighting, especially for savers who prefer\u00a0rate certainty\u00a0over chasing variable high\u2011yield accounts.<\/p>\n Gold, silver, and crypto<\/p>\n Rate\u2011sensitive and \u201chard asset\u201d markets are reacting in their own way:<\/p>\n Gold and silver have\u00a0rallied toward multi\u2011week highs, as traders position for lower real rates and a softer dollar if cuts materialize.\u00a0 [37]<\/a>Crypto markets are more mixed: some analysis frames the end of QT and high cut odds as a\u00a0structural tailwind\u00a0for Bitcoin and other tokens, but recent price action has been choppy as liquidity remains thin and risk sentiment fragile.\u00a0 [38]<\/a><\/p>\n (Nothing in this article is investment advice. Always consider your own circumstances and, if needed, consult a licensed financial professional.)<\/p>\n What to Watch Next<\/p>\n With the Fed in its\u00a0pre\u2011meeting blackout\u00a0\u2014 meaning no fresh policy commentary from officials \u2014 the focus shifts to data and politics over the coming days.\u00a0 [39]<\/a><\/p>\n Key signposts:<\/p>\n Economic data catch\u2011up:\u00a0Delayed reports on inflation and jobs, including the PCE price index and labor\u2011market indicators, will shape how confident the Fed feels about cutting while inflation is still above target.\u00a0 [40]<\/a>Bowman\u2019s testimony & Basel III path:\u00a0Any hints about\u00a0capital\u2011rule recalibration\u00a0\u2014 especially for regional banks \u2014 will matter for credit conditions and bank\u2011stock sentiment.\u00a0 [41]<\/a>December 9\u201310 FOMC meeting:\u00a0Beyond the rate decision itself, watch the\u00a0Summary of Economic Projectionsand the so\u2011called \u201cdot plot\u201d for clues about\u00a0how many cuts\u00a0the median policymaker anticipates in 2026.\u00a0 [42]<\/a>Fed leadership rumors:\u00a0Any confirmation \u2014 or pushback \u2014 on Kevin Hassett\u2019s odds to replace Powell could move\u00a0dollar, rates, and equity\u00a0markets, given the perceived shift in the Fed\u2019s long\u2011term reaction function.\u00a0 [43]<\/a>Bottom Line<\/p>\n As of\u00a0December 2, 2025, the Federal Reserve sits at a critical inflection point:<\/p>\n Short\u2011term rates are still restrictive but moving lower.QT has ended, removing a steady drain of liquidity from the financial system.Markets overwhelmingly expect a December cut, yet the committee itself is deeply divided, and the Fed is navigating intense scrutiny over both its balance sheet and its independence.<\/p>\n For households, that mix means\u00a0gradually easier borrowing costs, but not necessarily cheaper long\u2011term loans right away; for savers, it points toward\u00a0peak yields now and slower returns ahead; and for markets, it sets the stage for a\u00a0high\u2011volatility year\u2011end\u00a0where a single Fed decision \u2014 and a handful of dissents \u2014 could redraw the outlook for 2026.<\/p>\n References<\/p>\n 1. www.investopedia.com<\/a>, 2. www.investopedia.com<\/a>, 3. www.federalreserve.gov<\/a>, 4. www.reuters.com<\/a>, 5. www.reuters.com<\/a>, 6. www.reuters.com<\/a>, 7. www.federalreserve.gov<\/a>, 8. www.investopedia.com<\/a>, 9. www.interactivebrokers.com<\/a>, 10. www.federalreserve.gov<\/a>, 11. www.federalreserve.gov<\/a>, 12. www.reuters.com<\/a>, 13. www.reuters.com<\/a>, 14. www.investopedia.com<\/a>, 15. www.reuters.com<\/a>, 16. www.reuters.com<\/a>, 17. www.reuters.com<\/a>, 18. www.reuters.com<\/a>, 19. www.reuters.com<\/a>, 20. www.reuters.com<\/a>, 21. www.reuters.com<\/a>, 22. www.reuters.com<\/a>, 23. www.reuters.com<\/a>, 24. www.reuters.com<\/a>, 25. www.reuters.com<\/a>, 26. www.federalreserve.gov<\/a>, 27. www.reuters.com<\/a>, 28. www.mlex.com<\/a>, 29. www.federalreserve.gov<\/a>, 30. www.reuters.com<\/a>, 31. www.svb.com<\/a>, 32. www.tradingview.com<\/a>, 33. www.ainvest.com<\/a>, 34. wolfstreet.com<\/a>, 35. wolfstreet.com<\/a>, 36. www.investopedia.com<\/a>, 37. www.tradingview.com<\/a>, 38. www.ainvest.com<\/a>, 39. www.mpamag.com<\/a>, 40. www.mpamag.com<\/a>, 41. www.federalreserve.gov<\/a>, 42. www.federalreserve.gov<\/a>, 43. www.reuters.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Updated: December 2, 2025 The U.S. Federal Reserve enters the final stretch before its December 9\u201310 FOMC meeting…\n","protected":false},"author":2,"featured_media":164130,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,866,35133,3508,8123,111,139,69,9959],"class_list":["post-164129","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-federal-reserve","tag-financial-news","tag-interest-rates","tag-monetary-policy","tag-new-zealand","tag-newzealand","tag-nz","tag-quantitative-tightening"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/164129","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=164129"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/164129\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/164130"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=164129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=164129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=164129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}