Fed Faces 71% Chance of Rate Cut, Underscoring the Challenge of Balancing Inflation and Employment

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Fed Faces 71% Chance of Rate Cut, Underscoring the Challenge of Balancing Inflation and Employment

Bitget-RWA2025/11/22 16:26

By:Bitget-RWA

- Fed's December 25-basis-point rate cut odds rose to 71% as traders anticipate easing despite internal policy divisions. - Officials balance inflation risks (above 2% target) against labor market strains revealed in October meeting minutes. - Upcoming data on inflation, oil inventories, and global markets will shape final decision before December meeting. - Cryptocurrency markets show mixed signals: Bitcoin stagnates while stablecoin reserves hit record highs amid uncertainty.

The likelihood that the Federal Reserve will lower interest rates by 25 basis points in December has climbed to 71%,

based on data from the CME Group's FedWatch tool

, as traders increasingly anticipate a policy shift even though central bank officials remain divided. This development unfolds against a backdrop of economic complexity, with inflation worries and labor market figures influencing the Fed’s choices.

Federal Reserve officials are still at odds over whether a rate reduction in December is warranted,

as highlighted by the recently released minutes from the October meeting, which showed sharply contrasting opinions

. Initially, the market saw a 55% probability of a rate cut, but after the minutes were published, expectations for a pause rose to nearly 70%. This split highlights the Fed’s challenge: supporting a labor market under pressure while also keeping inflation, which is still above the 2% goal, in check.

Forthcoming economic reports will be crucial in guiding the Fed’s next move. On November 19, key data releases include U.S. crude oil stockpiles, the FOMC meeting minutes, and inflation figures from both the Euro Zone and the U.K.

These data points are expected to shed more light

on inflation trends and energy market conditions, both of which could sway the central bank’s policy direction. For now, the Fed is maintaining a cautious stance, with officials stressing the importance of additional data before making any firm decisions on rate adjustments.

Fed Faces 71% Chance of Rate Cut, Underscoring the Challenge of Balancing Inflation and Employment image 0

The prevailing uncertainty has already impacted financial markets, especially within the cryptocurrency space.

Bitcoin, which often gains from lower rates, has remained

confined to a tight trading range as expectations for rate cuts fluctuate. Experts point to lower liquidity and cautious investor strategies as reasons, with many waiting for clearer direction from the Fed. Meanwhile, stablecoin reserves have reached all-time highs, indicating that liquidity could support a rebound if monetary policy shifts.

Although the Fed’s December decision is still up in the air, the potential consequences for the economy and markets are considerable. A rate reduction might boost risk assets and encourage growth, while holding rates steady could reflect ongoing concerns about inflation. As the central bank carefully weighs its options, investors will be watching closely for any signals in its statements and upcoming data releases.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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