Markets say the Federal Open Market Committee (FOMC) is likely to trim rates at the December 9–10 meeting. Fed funds futures* imply roughly an 85% chance of a 0.25 percentage point (25 basis points) cut, with the target range moving from 3.75%–4.00% to 3.50%–3.75% if delivered.
Why the confidence? Inflation has cooled compared with last year, and core PCE*—the Fed’s preferred inflation gauge—is near a “2-point-something” handle year over year. Friday’s rescheduled report (September data) lands at 10:00 a.m. ET and can tug odds into the final stretch.
Jobs data are the second lever. Private payrolls from ADP arrive Wednesday morning, followed by Challenger job cuts Thursday, and broader labor reads later this month. Softer hiring momentum would reinforce a December trim; a surprise pickup could push the Fed to wait. ISM surveys (manufacturing Monday, services Wednesday) will color growth and price pressure signals going into the blackout.
Bottom line: The market leans toward a small cut now because inflation progress looks intact and growth is cooler. This week’s PCE and PMIs will either lock that in—or reopen the debate.
Post-meeting note—December includes fresh projections (the “dot plot”* in the Summary of Economic Projections, SEP*). If the Committee cuts but leaves 2026–2027 dots higher, that says “insurance cut, not a pivot.” If dots drift lower, markets may price a gentler path next year.
📚 Decoder
Core PCE: Inflation measure excluding food and energy; Fed’s favorite gauge.
Dot plot: Fed officials’ rate forecasts shown as individual dots.
Fed funds futures: Contracts that imply expected policy rates.
SEP (Summary of Economic Projections): Quarterly Fed outlook with dot plot.
⏱️ That’s this week’s Signal Spotlight.
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