Bitcoin Updates: Internal Disagreements at the Fed and Data Delays Cast Doubt on December Rate Reduction

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Bitcoin Updates: Internal Disagreements at the Fed and Data Delays Cast Doubt on December Rate Reduction

Bitget-RWA2025/11/20 14:02

By:Bitget-RWA

- Federal Reserve’s December rate cut prospects have dimmed, with markets pricing <50% chance of a 25-basis-point reduction amid hawkish signals and delayed data. - Fed officials like Schmid and Musalem emphasized caution, warning against easing risks, while internal FOMC debates revealed 10-2 vote split on October rate cuts. - Government shutdown delayed key economic data, forcing policymakers to rely on outdated metrics and complicating December decision-making. - Stock markets and cryptocurrencies react

Expectations for a Federal Reserve rate cut in December have dropped sharply, with market odds now below 50% for a 25-basis-point reduction at the central bank’s final meeting of the year. This change comes amid a series of hawkish remarks from Fed officials, postponed economic data releases, and persistent inflation worries, as noted by various analysts and official statements.

The CME FedWatch Tool, a key indicator of rate forecasts, indicated the likelihood of a December rate cut

had slipped to 44% as of November 17

, down from 67% just a week before. Meanwhile, data from prediction market Polymarket

showed an even greater gap

, with a 53% probability that rates will remain unchanged through December 2025—the first time this year that the odds of no change have overtaken those for a cut. This shift has strengthened the U.S. Dollar Index (DXY), which

hovered near 99.50

, as investors adjusted their expectations toward a more restrictive monetary stance.

Comments from Fed officials have played a major role in dampening hopes for a rate cut. Kansas City Fed President Jeffrey Schmid stressed the importance of "restraining demand growth," calling the current policy "somewhat restrictive" but suitable

based on recent reports

. St. Louis Fed President Alberto Musalem urged caution, noting there is "little room to ease without risking an overly loose policy," even as rates approach a neutral level

according to central bank updates

. The Federal Open Market Committee (FOMC) remains divided, as highlighted by

the October meeting minutes

, which pointed to "significant differences of opinion" about December, with "many members" favoring holding rates steady.

Bitcoin Updates: Internal Disagreements at the Fed and Data Delays Cast Doubt on December Rate Reduction image 0

Adding to the uncertainty, a government shutdown in the U.S. interrupted data collection, causing delays in key economic reports. The Bureau of Labor Statistics (BLS) announced it would skip the October unemployment release and instead combine October and November nonfarm payrolls data, publishing it on December 16—after the Fed’s December 9-10 meeting

as stated in economic updates

. Without timely data, policymakers have had to turn to alternative indicators, making their decisions even more complex.

Stock markets have reflected the Fed’s cautious approach. Dow Jones futures inched up as investors awaited both corporate earnings and the delayed economic data, but overall sentiment stayed fragile due to inflation concerns

according to market commentary

. The S&P 500 and Nasdaq came under pressure from worries about AI stock valuations, while cryptocurrencies such as

Bitcoin

(BTC) and

Ethereum

(ETH) experienced mixed movements. As the probability of no cut rose to 53%,

BTC

tested support around $90,000, and

ETH

traders managed risk with options strategies

based on Polymarket figures

The debate within the Fed has grown more intense as officials weigh inflation threats against signs of labor market weakness. Some, like Christopher Waller, support a December cut to "guard against a softening job market," while others, including Vice Chair Philip Jefferson, have refrained from backing immediate moves, citing employment risks

as per market analysis

. The October meeting minutes showed a 10-2 split in favor of a cut, with dissenters divided between tighter and looser policy, highlighting the FOMC’s lack of consensus

according to Reuters

With the September nonfarm payrolls report expected on November 20 and Fed minutes due November 21, investors are looking for more direction. However, the absence of October data and the delayed November report mean that policymakers will have to make a crucial decision with limited up-to-date information. As one analyst put it, the Fed’s December meeting may represent a "pause" in its easing cycle rather than a full reversal, with longer-term rate reductions still expected

according to economic commentary

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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