FOMC Preview: What Is The Bigger Risk, A Hawkish Cut Or A Dovish Cut

The Fed is widely expected to cut rates by 25bps to 3.50-3.75%, with Fed money markets currently pricing in a 90% chance of such an outcome, and this comes despite widening divisions among policymakers, with many dissents expected Wednesday by both hawks and doves (see below).

The latest cut would follow Octoberʼs reduction, bringing a total of 175bps in rate cuts since the easing cycle started in Sept 2024, although Chair Powell cautioned then that a December cut was far from assured and gave an analogy that “driving in the fog, you could slow down”.