CB Views: December 2025 FOMC Preview

Scenario 

Probability 

Assessment

Hawkish Cut
Base-Case

55%

• We expect that the Fed, in another non-consensus vote, will end up
  meeting market expectation and cut the target range by 25bps.
• However, Powell likely signals in the press conference that the
  decision was a “close call,” the target rate is near neutral, and that
  the bar for future cuts is higher now. Future cuts would be “at
  most” a set of tweaks. The median rate dots would also stay at 1
  cut only for 2026 and 2027 to remain consistent here.
•  Separately, we expect additional repo operations to address the
  year-end effect and potential changes to administrative rates.
• Market Implication: Another “risk management” insurance cut with
  a hawkish tone would not be viewed favorable by broader markets.
  This could reprice near-term STIR contracts until we get to see the
  NFP data the following week. Buy any major dip.

Neutral Cut

35%

• The only real difference between a hawkish cut and neutral cut will
  come down to if the ‘26 dots show a median 2 cuts. However, we
  would expect chair Powell to still delivery a hawkish presser.

Dovish Cut

10%

• The last FOMC event surprised as the message turned more
  hawkish and speakers post the event largely confirmed the shift. It
  would be odd to shift dovish without all of the data in hand.