Federal Reserve News Today (Dec. 2, 2025): Rate Cut Odds Near 90% as Fed Ends QT and Faces Growing Dissent

Updated: December 2, 2025

The U.S. Federal Reserve enters the final stretch before its December 9–10 FOMC meeting with three big storylines converging:

markets are heavily pricing in another interest rate cut,
the Fed has just ended its quantitative tightening (QT) program, and
policymakers are visibly split, raising the risk of unusually contentious votes in the weeks ahead. ^[1]

Below is a complete rundown of today’s key Federal Reserve news, forecasts, and analysis — and what it all might mean for rates, markets, and your money.

Key Takeaways

Policy rate today: The Fed’s target range for the federal funds rate stands at 3.75%–4.00% after quarter‑point cuts at the September and October meetings. ^[2]
QT is over: As of December 1, 2025, the Fed has stopped shrinking its balance sheet, ending its latest QT program after more than $2.2 trillion in securities runoff. ^[3]
December cut odds near 90%: Futures markets and major Wall Street banks now see a high probability (around 85–88%) of a 25‑basis‑point rate cut at the December 9–10 meeting. ^[4]
Forecasts keep drifting lower: BofA now expects a December cut plus two more cuts in mid‑2026, while J.P. Morgan sees a December cut followed by a “final” move in January. ^[5]
Internal divisions are widening: Reuters reports that as many as five of 12 voting FOMC members are skeptical of more cuts, setting up one of the most divided Fed votes in years. ^[6]
Regulation back in focus: Fed Vice Chair for Supervision Michelle Bowman testifies today on supervision and regulation and has signaled possible changes to the Basel III capital plan that could benefit banks of all sizes. ^[7]

Where Fed Policy Stands Right Now

The current rate setting

The Fed’s main policy rate — the federal funds rate — is currently targeted in a range of 3.75% to 4.00%. That’s the result of two 25‑basis‑point cuts at the September and October FOMC meetings, which followed a long period of rates above 5%. ^[8]

While those cuts marked a clear pivot toward easier policy, Fed officials have been careful to signal that December is “not a foregone conclusion”, stressing that further moves depend on incoming data on inflation and jobs. ^[9]

QT officially ends

On the balance‑sheet side, the Fed has just crossed a major milestone: QT is over.

On October 29, 2025, the FOMC announced that it would cease the runoff of its securities holdings starting December 1, 2025.
All principal payments from Treasury and agency securities will now be rolled over or reinvested, effectively freezing the size of the balance sheet (apart from normal drifts in other liabilities). ^[10]
Since QT began in June 2022, Fed securities holdings have fallen by more than $2.2 trillion, reducing their size from about 33% of nominal GDP to about 20%. ^[11]

Fed officials say they stopped QT because reserves are getting close to the “ample” level needed for their current interest‑rate control framework. Recent stresses in money markets — including heavier use of the Fed’s Standing Repo Facility and swings in the reverse‑repo program — highlighted the risk of pushing QT too far. ^[12]

Markets Are Betting Heavily on a December Rate Cut

Futures: odds near 85–88%

Across the Fed‑watching universe, the message is consistent: a December cut is now the base case.

The CME FedWatch Tool shows traders pricing in roughly an 85–88% chance of a 25‑basis‑point cut at the December 9–10 meeting. ^[13]
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. ^[14]

Wall Street forecasts: cluster around a cut

Two big shifts in bank research have reinforced that narrative:

Bank of America (BofA) now expects the Fed to cut in December, then deliver two more quarter‑point cuts in June and July 2026, ultimately lowering the policy rate to 3.00–3.25%. The bank explicitly ties its more aggressive easing call to anticipated changes in Fed leadership, not just the data. ^[15]
J.P. Morgan has reversed its earlier call for “no move until January” and now likewise expects a 25‑basis‑point cut in December, followed by a “final cut” in January. ^[16]

Most large brokerages now sit in the “December cut” camp, with Morgan Stanley and Standard Chartered among the few still forecasting no change this month. ^[17]

Leadership politics: Hassett’s shadow

Rate expectations are also being shaped by politics around the Fed chair job:

Kevin Hassett, the White House economic adviser, has emerged as the frontrunner to replace Jerome Powell when his term expires in May 2026, according to a Bloomberg‑sourced Reuters report. ^[18]
Currency and rates strategists interviewed by Reuters see Hassett as more dovish and potentially bearish for the dollar over time, given his bias toward faster cuts, even though they still expect the broader FOMC to constrain any one chair. ^[19]

BofA’s economists explicitly say that their expectation of additional cuts in 2026 is driven by a change in Fed leadership, underscoring how personnel politics is now baked into rate forecasts. ^[20]

Inside the Fed: Dissent, Blackout, and a High‑Stakes December Vote

An unusually divided committee

A striking theme in recent coverage is just how fractured the FOMC has become.

Reuters reports that up to five of the 12 voting members are skeptical of further cuts, while a group of Board governors in Washington favor additional easing to support a slowing job market. ^[21]

Fed Governor Christopher Waller has warned that the upcoming meeting could show three or more dissents if the committee cuts again — something that has happened only a handful of times since 1990. ^[22]

The debate is sharpened by:

Stalling progress on inflation at the Fed’s 2% goal,
Softening job growth, and
A historic government shutdown that delayed key data (like the September employment and inflation reports), forcing policymakers to lean on partial or older information. ^[23]

Political pressure on the Fed’s toolkit

The Fed’s tools themselves are under unusual scrutiny:

U.S. Treasury Secretary Scott Bessent recently criticized the Fed’s “ample‑reserves” framework, saying the multi‑facility system (with standing repo and reverse‑repo tools) has become overly complex and is “fraying” as the balance sheet nears its new smaller size. ^[24]
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 — even as most Fed officials see the system as efficient and self‑stabilizing. ^[25]

Add to that the question of Fed independence under a potentially more politically aligned chair, and the December decision becomes as much about institutional credibility as about 25 basis points.

Regulatory Front: Bowman’s Testimony and Basel III Flexibility

Today’s main official Fed event is not a rate speech but bank regulation.

Bowman’s priorities before Congress

Fed Vice Chair for Supervision Michelle W. Bowman appears today before Congress in a hearing on “supervision and regulation.” According to her prepared testimony and the accompanying Supervision and Regulation Report, she plans to focus on: ^[26]

The current health of the banking sector,
Progress on her priorities for efficiency, safety and soundness, and financial stability, and
The Fed’s approach to making regulation more effective and accountable.

Bowman, a former community banker, was confirmed in June as the Fed’s top bank regulator and is widely seen as more industry‑friendly, with an agenda that includes easing certain post‑crisis rules where she believes they overshoot. ^[27]

Possible changes to the Basel III capital plan

Fresh reporting today from regulatory‑focused outlets indicates that Bowman has signaled the Fed may revise its Basel III “endgame” proposal to “more granularly differentiate” capital requirements and extend benefits to banks of all sizes — not just the very largest institutions. ^[28]

In practical terms, that could mean:

Lighter capital surcharges for some regional and mid‑size banks,
Tweaks to the risk‑weighting of certain assets, and
Potentially more flexibility in how banks support lending and market‑making, particularly in the Treasury market.

With the Fed having just ended QT — which affects reserve levels and bank liquidity — any shift in capital rules will be closely watched for its impact on credit availability and financial‑stability buffers.

End of QT: Why It Matters for Markets and the Economy

Even though QT’s formal end took effect yesterday, markets are still digesting what it means.

From runoff to reinvestment

Under the new regime:

Treasury and agency principal payments are fully reinvested, so the Fed’s securities holdings should stabilize around $6.5–6.6 trillion, rather than shrinking further. ^[29]
Money‑market conditions had already hinted that reserves were no longer “plentiful,” with higher repo rates and more frequent Fed facility usage. Ending QT is meant to lock in “ample” reserves and avoid the kind of funding squeeze that hit markets in 2019. ^[30]

Commentary from banks and asset managers frames the decision as broadly supportive for risk assets: less balance‑sheet runoff means less upward pressure on Treasury yields over time and a structurally more liquid environment for bonds and credit. ^[31]

Interaction with rate cuts

Crucially, ending QT does not mean policy is suddenly loose:

The Fed is still running positive short‑term real rates — and is only contemplating gradual cuts.
However, a December rate cut on top of a QT halt would mark a clear pivot from “tightening and shrinking” to “easing and holding,” a combination that many see as bullish for bonds, equities, gold, and other duration‑sensitive assets. ^[32]

Crypto‑focused outlets, for example, are already touting the end of QT as a potential catalyst for digital assets, arguing that more stable liquidity and looming rate cuts could support a new cycle — though they also caution that weak market depth and volatility make outcomes highly uncertain. ^[33]

How Today’s Fed Story Hits Households and Investors

Borrowers: mortgage and loan rates

While the Fed has cut short‑term rates and ended QT, long‑term yields are not moving in lockstep:

The 10‑year Treasury yield jumped back above 4.0% early this week, reversing last week’s drop.
The 30‑year yield climbed toward the upper end of its recent 4.5%–5.0% range. ^[34]

Mortgage watchers report that 30‑year fixed mortgage rates have also pushed higher again, hovering around the low‑ to mid‑6% range, erasing much of the recent relief. Analysts emphasize that Fed cuts don’t automatically translate into lower long‑term or mortgage rates; those depend more on inflation fears, supply of Treasuries, and global risk appetite. ^[35]

Savers: savings and CD yields likely to drift lower

On the other side of the ledger, a December cut would likely push savings yields down:

Investopedia notes that another quarter‑point cut would pressure high‑yield savings and CD rates, with top savings APYs likely slipping from around 4–5% as banks re‑price in line with the lower policy rate. ^[36]

Locking in multi‑year CDs before the Fed moves is one strategy many personal‑finance commentators are highlighting, especially for savers who prefer rate certainty over chasing variable high‑yield accounts.

Gold, silver, and crypto

Rate‑sensitive and “hard asset” markets are reacting in their own way:

Gold and silver have rallied toward multi‑week highs, as traders position for lower real rates and a softer dollar if cuts materialize. ^[37]
Crypto markets are more mixed: some analysis frames the end of QT and high cut odds as a structural tailwind for Bitcoin and other tokens, but recent price action has been choppy as liquidity remains thin and risk sentiment fragile. ^[38]

(Nothing in this article is investment advice. Always consider your own circumstances and, if needed, consult a licensed financial professional.)

What to Watch Next

With the Fed in its pre‑meeting blackout — meaning no fresh policy commentary from officials — the focus shifts to data and politics over the coming days. ^[39]

Key signposts:

Economic data catch‑up: Delayed reports on inflation and jobs, including the PCE price index and labor‑market indicators, will shape how confident the Fed feels about cutting while inflation is still above target. ^[40]
Bowman’s testimony & Basel III path: Any hints about capital‑rule recalibration — especially for regional banks — will matter for credit conditions and bank‑stock sentiment. ^[41]
December 9–10 FOMC meeting: Beyond the rate decision itself, watch the Summary of Economic Projectionsand the so‑called “dot plot” for clues about how many cuts the median policymaker anticipates in 2026. ^[42]
Fed leadership rumors: Any confirmation — or pushback — on Kevin Hassett’s odds to replace Powell could move dollar, rates, and equity markets, given the perceived shift in the Fed’s long‑term reaction function. ^[43]

Bottom Line

As of December 2, 2025, the Federal Reserve sits at a critical inflection point:

Short‑term 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.

For households, that mix means gradually easier borrowing costs, but not necessarily cheaper long‑term loans right away; for savers, it points toward peak yields now and slower returns ahead; and for markets, it sets the stage for a high‑volatility year‑end where a single Fed decision — and a handful of dissents — could redraw the outlook for 2026.