--- title: "The likelihood of a rate cut in December is becoming increasingly slim! The key voting member of the Federal Reserve has turned hawkish, and U.S. stocks have gone straight from KTV to ICU" type: "News" locale: "en" url: "https://longbridge.com/en/news/266821064.md" description: "Disagreements within the Federal Reserve over a rate cut in December have intensified, with hawkish and dovish camps at odds. Federal Reserve Governor Michael Barr's concerns about inflation have dimmed expectations for a rate cut, leading to significant volatility in the U.S. stock market. Despite positive news from NVIDIA and Alphabet - C, the market's focus on the Federal Reserve's hawkish stance intensified, causing U.S. stocks to open higher on Thursday but ultimately decline sharply" datetime: "2025-11-21T00:09:04.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/266821064.md) - [en](https://longbridge.com/en/news/266821064.md) - [zh-HK](https://longbridge.com/zh-HK/news/266821064.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/266821064.md) | [繁體中文](https://longbridge.com/zh-HK/news/266821064.md) # The likelihood of a rate cut in December is becoming increasingly slim! The key voting member of the Federal Reserve has turned hawkish, and U.S. stocks have gone straight from KTV to ICU According to Zhitong Finance APP, as Federal Reserve Governor Michael Barr issued significant signals regarding inflation concerns, the internal divisions among Federal Reserve officials regarding the interest rate outlook for December and beyond have intensified. Another Federal Reserve monetary policy maker with voting rights in the FOMC has expressed increasing unease about the resurgence of inflation. After the Federal Reserve announced interest rate cuts in September and October, restarting the rate-cutting process after a year, the probability of further rate cuts in December seems to be diminishing. Traders who previously priced in three consecutive rate cuts this year have shifted towards a hawkish stance, leading to a continued decline in risk assets such as stocks and cryptocurrencies due to changes in the interest rate trajectory. At this point, a strong hawkish camp and a dovish camp advocating for continued rate cuts have completely formed within the Federal Reserve (including 2025 FOMC voters and governors). This is why U.S. stocks experienced a collective plunge after a brief rise on Thursday. Notable financial journalist Nick Timiraos, known as the "new Federal Reserve correspondent," recently stated that the latest non-farm payroll report released in September further deepened the divisions among Federal Reserve officials. Both hawks and doves can glean insights from the non-farm report regarding the core logic of pausing or continuing rate cuts, and the recent lack of economic data has made it even more difficult for Federal Reserve officials to reach a consensus on the outlook. NVIDIA's exceptionally strong performance and future outlook, along with Google's AI application ecosystem making a significant impact, combined with non-farm payroll data that can be described as a "Goldilocks soft landing," should have been a double positive. However, as Bitcoin prices fell below the $90,000 mark, triggering a sharp sell-off in risk assets, the market turned increasingly focused on the hawkish stance of Federal Reserve officials, resulting in an epic "high open, low close" scenario for U.S. stocks on Thursday. The three major U.S. stock indices opened significantly higher, with the S&P 500 index rising 1.44% and the Nasdaq index soaring 2.18%. However, during the midday session, a dramatic reversal occurred, leading to a sharp decline across the board, with the S&P 500 index closing down 1.56% and the Nasdaq index plummeting 2.16%. The September non-farm payroll data indicates that the U.S. non-farm labor market is facing a very "contradictory" situation. On one hand, employment numbers exceeded expectations, while on the other hand, the unemployment rate unexpectedly rose to a four-year high. This data serves as the last employment report before the Federal Reserve's monetary policy meeting in December, and the lagging and contradictory nature of this data has led to increasing divisions among Federal Reserve officials regarding the outlook for interest rate paths. **Barr's decision is crucial for the Federal Reserve's announcement in December regarding whether to continue or pause rate cuts.** Michael Barr, the Federal Reserve governor primarily responsible for regulatory affairs, rarely comments on monetary policy and typically does not express any stance regarding the monetary policy outlook. However, he stated on Thursday that the Federal Reserve indeed needs to proceed cautiously when considering further rate cuts. In his remarks, Barr stated, "What concerns me is that we see inflation still around 3%, while our long-term inflation target is 2%, and we are committed to bringing inflation down to that 2% target. Therefore, we do need to maintain a careful and cautious stance in monetary policy right now, as we want to ensure we achieve our dual mandate's two main objectives Baal did not directly express opposition to the Federal Reserve lowering interest rates again, but his concerns about the stagnation of the inflation-fighting process under the heavy pressure of Trump's tariffs will further exacerbate the internal policy consensus divergence faced by Federal Reserve Chairman Jerome Powell—who is trying to foster a positive consensus among a group of increasingly divided monetary policy decision-makers to convey a harmonious voice of consensus to the market ahead of the Federal Open Market Committee (FOMC) monetary policy meeting scheduled for December 9-10 in Washington, D.C. According to the pricing of interest rate futures market contracts, traders currently generally believe that the probability of a rate cut at the December monetary policy meeting is about 40%, far less than the 80% rate cut probability priced in by the market last month. Baal supported the Federal Reserve's rate cut decisions in September and October, but has not yet signaled anything regarding the December monetary policy meeting. Since several of his colleagues (all voting members of the FOMC in 2025) have clearly expressed support for or strong opposition to consecutive rate cuts, his vote may play a crucial role amid the current high uncertainty regarding the monetary policy path. However, at present, his stance clearly leans towards pausing rate cuts, which gives the hawkish camp a slight edge. After a prolonged federal government shutdown, the Federal Reserve has finally begun to receive new official statistics, but so far, these data have not significantly alleviated the huge divergence among monetary policy makers. The U.S. Bureau of Labor Statistics released the September non-farm payroll report on Thursday, presenting a mixed picture. U.S. employers added a net 119,000 jobs—this figure is the best since April, but the non-farm payroll data for August and previous months were unexpectedly revised downward, and the unemployment rate slightly rose to 4.4%. After the data release, Baal stated that he believes the labor market "has indeed cooled somewhat," but he emphasized that the jobs created by the resilient U.S. economy are close to the so-called "break-even" pace, which is sufficient to keep the unemployment rate at a stable level over the long term. **The Hawkish Voice is Deafening** On the same day, the hawkish 2026 FOMC voting member and President of the Federal Reserve Bank of Cleveland, Beth Hammack, described the September employment data as "already outdated" and reiterated her opposition to further rate cuts by the Federal Reserve. She also stated that further rate cuts by the Federal Reserve could seriously threaten financial stability and insisted that the financial environment is leaning towards being accommodative. "The recent significant rise in the stock market and seemingly loose credit conditions reflect that the financial environment is actually still quite accommodative," Hammack emphasized on Thursday. "These loose conditions should be very helpful in boosting economic growth next year." Hammack also stated, "If rates are lowered to support the labor market, there is a risk of prolonging this high inflation period, which could also encourage increasingly aggressive risk-taking behavior in the financial markets. This means that whenever the next economic downturn occurs, its scale could be larger than it otherwise would be, and the impact on the economy could be greater." Almost simultaneously, at a separate event in Indianapolis, the neutral-leaning President of the Chicago Federal Reserve, Austan Goolsbee, also sided with the hawkish camp Goolsbee stated that he remains very concerned about the possibility of another rate cut in December. At almost the same time on Thursday, Federal Reserve Governor Cook indicated that the likelihood of a significant drop in asset prices has increased, but she noted that, considering the overall resilience of the financial system, she does not see destructive vulnerabilities similar to those during the Great Recession. Goolsbee remarked that the fight against inflation "seems to have stalled, and if there is still one now, it has even sent warning signals of moving in the wrong direction. This indeed makes me very uneasy." Goolsbee has voting rights on monetary policy in this year's Federal Open Market Committee (FOMC), while Harmack will have voting rights in 2026. Jeff Schmid, the president of the Kansas Federal Reserve and a voting member of the FOMC in 2025, is a representative figure in the hawkish camp of the Federal Reserve. He even voted against the Fed's rate cut decision in October, believing that this move could undermine the Fed's efforts to achieve the 2% inflation target amid ongoing inflationary pressures. He has repeatedly stated that he cast his dissenting vote due to concerns that economic growth and massive investments would put upward pressure on inflation. Lorie Logan, the president of the Dallas Federal Reserve and a voting member of the FOMC in 2026, has also recently stated that inflationary pressures are significant, and although the labor market is in a weak state, it still drives the expansion of the U.S. economy, thus supporting a pause in rate cuts in the absence of economic data ### Related Stocks - [Alphabet Inc. 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