The Federal Reserve cut interest rates by a quarter percentage point on Wednesday to 3.75-4.00% and said it would end its balance-sheet runoff on Dec 1. But the bigger news came in Chair Jerome Powell’s warning that another rate cut in December is “not a foregone conclusion. Far from it.”

That comment, unusually forceful for Powell, highlighted growing divisions inside the Fed and a shifting economic landscape that makes further easing anything but certain.

Powell acknowledged “strongly different views” within the Federal Open Market Committee during October’s policy decision. Governor Stephen Miran dissented in favor of a larger, half percentage point rate cut, while Kansas City Fed President Jeffrey Schmid voted for no change. Still, said Powell, the disagreement was “really about the future.”

Powell’s warning about December was the most important line from his press conference, wrote Dario Perkins, managing director at TS Lombard.

“The ‘far from it’ part was kind of unnecessary, and heavily loaded. He intended to send a signal, and the [Fed] clearly wants to go into its meeting in six weeks’ time with its options open,” Perkins noted.

Powell has long been viewed as a consensus builder, steering a committee that prizes unanimity and clear communication. That skill is now being tested.

“There seems to be a lot of different views on the committee. More than I can ever remember, with dissents in each direction,” said Brian Rehling, head of global fixed income strategy at Wells Fargo Investment Institute. “Differing views become more so when Powell’s term gets closer to ending. There’s a lack of data and visibility, and there’s a lot of uncertainty. That’s what today’s press conference highlighted.”

Rehling added that Powell’s leadership challenge may grow as his term as chair, which ends in May 2026, winds down.

“As you get closer to that point, everybody is doing what they think is best and drawing favor with whoever the next chair is going to be,” Rehling said.

But the Fed is also confronting an unusually difficult mix of data and uncertainty.

The job market has softened, but not dramatically. Powell noted hiring and layoffs are both low. ADP’s employment report for September showed a 32,000-job decline and Americans’ confidence in finding a new job has fallen to a record low, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations.

“Downside risks to employment have increased in recent months,” Powell said, but added that “you don’t see anything that says that the job market, or really any part of the economy, is making a significant deterioration.”

Inflation, meanwhile, is still running above target. Powell estimated prices have risen 2.8% over the past year, with goods inflation picking up because of tariffs even as housing and service inflation continues to cool.

“Inflation, away from tariffs, is actually not so far from our 2% goal,” he said, but cautioned the impact of tariffs “could be more persistent, and that is a risk to be assessed and managed.”

The economy has also surprised to the upside. The Atlanta Fed’s closely watched GDPNow model shows the U.S. economy surging ahead at a 3.9% annualized growth rate for the third quarter of the year, and growth from the second quarter has been revised upwards.

Powell said growth “may be on a somewhat firmer trajectory than expected,” driven by resilient consumer spending. That strength, combined with persistent price pressures, has some officials questioning whether policy is already close to neutral.

“There’s a growing chorus now of feeling like maybe this is where we should at least wait a cycle,” Powell said.

Robert Tipp, chief investment strategist at PGIM Fixed Income, said in a note that the challenge now is Powell’s ability to keep the committee aligned.

“The market is clearly disappointed by Chairman Powell distancing himself from the prospect of a December cut,” he said. “Keeping the Fed in motion will require cooperation from the data, and a significant effort from Powell working to corral a committee with widely divergent views proceeding in a data vacuum.”

That vacuum is complicating everything. The government shutdown, which began Oct. 1, has delayed official labor, spending, and inflation reports, forcing the Fed to rely on private data, surveys, and anecdotes. Powell compared it to driving in the fog, adding that such uncertainty “could be an argument in favor of caution about moving.”

Perkins warned there is a greater risk of a policy error the longer the data hiatus continues.

The Fed also announced it will end its balance-sheet runoff on Dec. 1, marking the end of its long effort to shrink the central bank’s holdings of Treasuries and mortgage securities. Powell said the decision reflects evidence that reserves in the banking system are now “somewhat above ample.”

The end of quantitative tightening, he said, is meant to keep financial plumbing running smoothly, not signal an easier stance.

Investors had priced in more easing, but Powell’s insistence that “policy is not on a preset course” suggests the bar for further cuts has risen.

The shock to markets was stark. On Tuesday, investors were pricing in a 92% chance of a December cut, according to Bloomberg data. Today that is down to a 67% chance.

Powell is still trying to steer a consensus around an increasingly uncertain economy, one where growth and inflation remain stronger than expected even as job creation slows. Whether the next move comes in December or later, the balance of risks that once pointed toward easing no longer looks so one-sided.