Fed Opposed the Last Cut, Still Weighing a Move in December

Federal Reserve Bank of Minneapolis President Neel Kashkari revealed that he did not support the central bank’s most recent interest-rate cut, even as he continues to weigh his options ahead of the December policy meeting. While he isn’t firmly opposed to further easing, he emphasized that the evidence heading into October suggested a different path.

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In an interview on Thursday, Kashkari said that both anecdotal reports and the economic data available at the time pointed to a level of underlying economic strength he hadn’t expected. That resilience, he said, made him believe that the Federal Reserve should have paused its rate-cutting cycle rather than moving forward with another reduction at the October meeting.

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Since that decision, he noted, the economic picture hasn’t shifted much. The latest numbers continue to reflect the same steady momentum in activity. Looking ahead to the upcoming Dec. 9–10 meeting, Kashkari said the appropriate course of action remains an open question. “Depending on how the data evolves, I could support another cut or I could support holding rates steady,” he said. “We simply need to see how conditions unfold.”

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Although Kashkari does not have a vote on this year’s Federal Open Market Committee decisions, he still plays an active role in policy discussions and helps shape the broader debate inside the central bank.

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Markets have taken cues from recent Fed commentary, and investors have now scaled back expectations for a December cut to roughly even odds. Several policymakers have signaled that they see little justification for a third consecutive reduction following the rate cuts delivered in September and October. Those comments have made traders more cautious about pricing in additional near-term easing.

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Following the September meeting, Kashkari had projected that the Fed would likely lower rates two more times in 2025. He noted on Thursday that he held that view because, at the time, he believed the economy was starting to cool more noticeably.

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Still, he acknowledged that the economic landscape remains uneven. “There’s been a wave of headlines about stress among low-income borrowers subprime households, companies tied to subprime markets and those signs point to real pockets of weakness, especially in the labor market,” he said. These challenges suggest that certain parts of the economy are feeling the sting of higher borrowing costs more acutely than others.

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Yet the broader corporate environment paints a more complicated picture. Kashkari pointed out that many companies continue to post solid earnings results, and business leaders across a range of industries remain upbeat about their prospects heading into 2026. That mix of softness in vulnerable segments and strength among larger or more financially stable firms highlights the complexity of the Fed’s decision-making process as it navigates the next phase of monetary policy.

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Kashkari’s comments reflect the ongoing tension inside the central bank: on one hand, concerns about pockets of weakness and financial strain among at-risk borrowers, and on the other, evidence of resilient demand and corporate optimism that suggests the overall economy may not need additional stimulus in the near term.

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As the December meeting approaches, policymakers will be watching for clear signals about the trajectory of consumer spending, labor market health, and inflation trends. While recent data indicates that the economy is still expanding at a steady pace, the Fed is also monitoring the risk of over-tightening or under-responding in an environment where economic conditions vary significantly across sectors.

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For investors, the uncertainty underscores a broader theme that has shaped markets throughout the year: the Fed is no longer on a predictable path. Instead, policy will depend heavily on evolving data and the balance of risks, making every new economic release from jobs numbers to inflation reports a potential driver of shifting expectations.

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Despite not having a vote this year, Kashkari’s perspective offers insight into the broader debate happening inside the central bank. His willingness to consider both a pause and a cut in December signals that officials remain divided on how much easing is appropriate in the current environment.

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Ultimately, what happens at the December meeting will hinge on whether incoming data points to a slowdown strong enough to justify another cut or whether the central bank believes the economy’s resilience warrants a more cautious stance. For now, officials and investors remain in wait-and-see mode, watching closely as the final round of pre-meeting data rolls in.

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