November Fed minutes shows deep internal monetary differences

20 Nov 2025 , 11:20 AM

DEEP FISSURES APPEAR IN THE FOMC MINUTES

In the Fed meeting dated October 28-29, 2025; the Fed had cut rates by another 25 bps to the level of 3.75%-4.00%. It may be recollected that in the September 2025 meeting, the Fed had already cut rates by 25 bps. One thing that emerges from the minutes of the October Fed meet, published on November 19, 2025, show that there were deep fissures. The 10-2 vote may not be entirely illustrative of the fissures as the text of the minutes shown. Now, the probability assigned to a December rate cut in the combined dot-plot chart is also down to just 33%. But what has led to such deep fissures?

The fissures stem from two key realities. Firstly, there continues to be contrasting data indications from macros. The Inflation at 3.0% does not exactly support a rate cut, especially with the tariff impact not fully factored in. On the other hand, the data on unemployment shows a lot of pressure, although that is not supported by robust GDP data. The second, and possibly bigger issue is with availability of data flows. The 44-day shutdown of the US economy led to total disruption of data flows. While the Fed has assured that it still has access to data points, markets are not too sure. The general feeling is that while the Fed members may not be groping in the dark, they are on a foggy road.

WHAT WE READ FROM MINUTES OF FOMC OCT-25 FED MEET?

Here are key inferences that we drew from the Fed minutes published on November 19, 2025; 3 weeks after the FOMC meeting on October 28-29, 2025.

• The vote was 10-2 in favour of a 25-bps rate cut. However, that was not reflective about the level of conviction in the members. Among the FOMC members, only Miran, Waller, and Bowman fully supported the rate cut. Others were opposed or, at best, neutral.
• Amidst these dissensions, data flows remain elusive. The September unemployment data is only expected this week, and that too partial data. There has been no CPI inflation, PCE inflation, or even GDP update for the last 50 days.
• In the post-policy conference, Powell had mentioned that a December rate cut was not a “foregone conclusion.” In the last 21 days, the general expectations have moved more towards status quo in December, and a possible rate cut in 2026.
• Currently, Fed chair Powell and Vice Chair Jefferson tilt more towards a cautious view on rate action. Hence, another rate cut in December is very unlikely, unless there is evidence of the inflation number really coming down sharply.
• For now, the Fed will await the backlog of data on inflation, unemployment, non-farm payrolls and quarterly GDP. There is still no data on Q3 GDP or jobs data after August. That is unlikely to improve a lot before the December FOMC meet.

Clearly, it looks like a highly likely status quo on rates in the December 2025 meet. Trump may be in a hurry to see lower rates, but it is tough to question Powell’s logic.

CME FEDWATCH SAYS; LOOK TO 2026 FOR RATE CUTS

The CME Fedwatch is based on implied probabilities of Fed Futures trading.

Fed Meet	150-175	175-200	200-225	225-250	250-275	275-300	300-325	325-350	350-375	375-400
Dec-25	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil	32.8%	67.2%
Mar-26	Nil	Nil	Nil	Nil	Nil	Nil	7.1%	30.8%	42.9%	19.2%
Jun-26	Nil	Nil	Nil	Nil	1.1%	8.7%	26.1%	36.0%	22.9%	5.3%
Sep-26	Nil	Nil	0.2%	1.9%	8.9%	21.6%	30.4%	24.6%	10.6%	1.9%
Dec-26	Nil	0.1%	1.1%	5.1%	14.0%	24.6%	27.6%	19.0%	7.2%	1.2%

Data source: CME Fedwatch

While the CME data is available till December 2027, anything beyond 2026 is too probabilistic, and hence we have not considered. Here is a quick look at the quarterly probability of rate action till December 2026.

• The December rate cut of 25 bps is likely to be postponed to happen by March. By March, there is almost an 80.8% probability of a 25-bps rate cut to 3.50%-3.75%.
• By December 2026, markets are assigning a high probability of 91.4% to a second rate cut of 25 bps. A third rate cut by Dec-26 has a probability of 72.6%, still quite likely.

We may have to wait till the proper data flows start. For now, it looks like a rate cut in December is ruled out. That may be pushed back to the first quarter of next year. However, a lot will still depend on the elusive data; that has been missing for the last two months!