As doubts fade over whether the Federal Reserve will deliver a third rate cut this year, markets widely expect a 25-basis-point reduction on Wednesday (December 10) — though the decision may come with internal dissent.

Former Fed Vice Chair and Princeton economist Alan Blinder noted: "This is a tough call, but I do think a cut is more likely... I wouldn’t be surprised if this turns out to be a hawkish cut." The move could simultaneously signal to markets not to expect consecutive cuts at every upcoming meeting. Blinder suggested the divided committee might produce dissenting votes on both sides.

Wilmington Trust Chief Economist Luke Tilley similarly predicts a December cut, expecting Chair Jerome Powell to reiterate his November framework: emphasizing policy divergence while cautioning against assumptions of sustained easing.

Several Fed officials have recently argued against urgent cuts due to lingering inflation concerns, with prices still running a full percentage point above the 2% target. This camp includes Boston Fed President Susan Collins and Kansas City Fed chief Jeff Schmid. Chicago Fed’s Austan Goolsbee has also expressed hesitation about front-loading cuts amid inflation worries. Conversely, New York Fed President John Williams — as FOMC Vice Chair and leadership member — signaled openness to easing weeks ago.

Williams stated on November 21: "I believe there remains room to adjust the federal funds rate target range further to bring policy closer to neutral." Some Fed watchers say this remark alone shifted probabilities.

Former Cleveland Fed President Loretta Mester observed: "Vice Chair Williams doesn’t typically telegraph moves this strongly unless he has the Chair’s backing. My read is they’ll proceed with a 25bp December cut." While not opposing cuts outright, Mester would prefer waiting until early next year to assess economic performance before adjusting policy.

She noted: "Beyond September’s dot plot projections, I don’t see compelling reasons for this cut — it seems more about efficiency than solid economic rationale." Blinder warned that additional cuts now risk entrenching inflation: "If the Fed keeps cutting, we may face persistent inflation pressures — and we might already be there."

Data Dilemmas Ongoing government shutdowns have delayed inflation releases through October and November, with the Fed’s preferred PCE gauge running two months behind. September core inflation (excluding food/energy) eased to 2.8% annually, while officials expect year-end inflation at 3.1%. A stronger-than-expected September jobs report showed payrolls rebounding to +119,000 after August’s -4,000 decline, continuing volatile trends. The Fed’s Beige Book noted modest layoffs and hiring freezes in early November, with some firms citing AI displacing entry-level roles.

2026 Forecasts in Focus Analysts will scrutinize policymakers’ signals about future paths this week. Powell will hold his customary post-meeting press conference, while officials release updated quarterly projections including their first 2026 outlook.

Mester hopes Powell clarifies their economic assessment, saying she’d approach further cuts cautiously given inflation drivers beyond tariffs (which she views as one-off) including persistent service prices. While the Fed aims to ease labor market deterioration, Mester attributes current weakness largely to structural shifts like immigration policy impacts — factors beyond rate cuts’ reach. She noted: "The job market seems stuck in neutral — I’m unconvinced cuts would help."

Tilley, however, predicts three more cuts at subsequent meetings, citing weakening employment trends. He estimates 154,000 federal workers taking buyouts could push November unemployment to 4.5%, with private-sector job growth (ex-healthcare) already negative per BLS data. "Between federal exits and struggling new entrants, we’re seeing a very soft labor market," he said.

Bank of America senior economist Aditya Bhave forecasts two 2024 mid-year cuts (to 3.0-3.25%), driven more by leadership transition than economic need. He warns: "A December cut raises risks of entering accommodative territory just as fiscal stimulus kicks in."

Accenture Managing Director Amir Baghpur projects one or two 2024 cuts post-December, assuming: core PCE at 2.5-2.7%, GDP growth of 1.5-1.8%, year-end unemployment at 4.4-4.6%, and monthly job gains averaging 75,000-125,000. Updated Fed projections for inflation, GDP and unemployment will be released Wednesday.