What to Expect from the December 10 FOMC Decision and Press Conference
WASHINGTON – When Federal Reserve Chair Jerome Powell steps to the podium at 2:30 p.m. ET on Wednesday, December 10, he will deliver the closing chapter of one of the most consequential monetary-policy years in modern history. After three rate cuts in 2025, a 43-day government shutdown that scrambled economic data, and growing speculation about his own job security under the incoming Trump administration, Powell faces a high-stakes balancing act: engineer a soft landing while keeping inflation’s grave from reopening.
Markets have already placed their bets. As of Sunday evening, traders are assigning an 87–90% probability of a fourth consecutive 25-basis-point cut, which would lower the federal funds rate to a target range of 3.50–3.75%. Only a major surprise in the final days could derail that outcome.
The Base Case: One More Cut, Then a Pause
Most Wall Street economists and Fed insiders expect the committee to deliver a quarter-point reduction and then strongly signal that the easing cycle is nearing its end. Supporting that view:
- Core PCE inflation has cooled to 2.7% in October but remains sticky above the Fed’s 2% target.
- The labor market is softening (unemployment 4.5%, job growth averaging ~110k over the past three months) but not collapsing.
- Incoming tariffs threatened by the Trump transition team could add 0.5–1.0 percentage point to headline inflation in 2026, giving hawks ammunition to resist further cuts.
“Look for Powell to describe this cut as ‘insurance’ against labor-market deterioration while stressing that policy remains restrictive,” said Krishna Guha, vice chair of Evercore ISI and a longtime Fed watcher. “The key sentence will be something close to ‘further adjustments will depend on the evolution of the data and the balance of risks.’ Translation: we’re probably done for a while.”
The New Dot Plot Will Tell the Real Story
The updated Summary of Economic Projections — the infamous “dot plot” — will be released alongside the 2:00 p.m. statement. In September, the median dot showed two additional cuts in 2026 (50 bps total). Consensus now expects the 2026 median to be trimmed to one or two cuts at most, with the longer-run “neutral” rate lifted slightly to 3.0–3.25%.
A more hawkish shift (zero or one cut in 2026) would spark an immediate sell-off in equities and a spike in bond yields. A surprise dovish hold (three or more cuts) would ignite a powerful year-end risk rally.
Powell’s Press Conference: Five Questions That Will Move Markets
- Tariffs and Inflation
Expect at least one journalist to ask how the Fed is incorporating potential 10–60% tariffs on imports. Powell is likely to repeat that tariffs are “a change in the structure of relative prices” and that the Fed does not react to supply shocks unless they threaten to dislodge longer-term inflation expectations. Translation: we’ll look through the first round but not the second. - Labor Market “Stall Speed”
Recent layoffs at tech giants and weakness in temporary-help services have raised fears of a sharper slowdown. Powell will probably acknowledge the softening but emphasize that the unemployment rate remains low by historical standards. - His Own Future
President-elect Trump has repeatedly criticized Powell and declined to say whether he will reappoint him when his term as chair expires in May 2026. Powell has consistently said he intends to serve out his term and will not comment on politics. Don’t expect him to break that discipline on Wednesday. - End of Quantitative Tightening
The Fed quietly ends its balance-sheet runoff this month, a move that will inject roughly $95 billion of reserves in December alone. Markets will want to know whether this counts as stealth QE. Powell will insist it is merely reflects a technical adjustment to ample reserves. - AI and Productivity
A wildcard: several governors have begun citing artificial intelligence as a potential upside surprise for productivity and thus the neutral rate. A single bullish sentence from Powell could fuel a fresh leg higher in tech stocks.
Market Scorecard: What Each Outcome Means
| Outcome | S&P 500 (24h) | Bitcoin (24h) | 10-Year Yield | 2026 Cuts Priced |
|---|---|---|---|---|
| 25 bps + neutral/dovish Powell | +1.0–2.5% | +6–12% | ↓ to 3.90–4.00% | 60–75 bps |
| 25 bps + visibly hawkish Powell | −0.5–2.0% | −3–8% | ↑ to 4.15–4.25% | 25–40 bps |
| Surprise pause (no cut) | −2–4% | −10–15% | ↑ >4.30% | <25 bps |
| Surprise 50 bps cut | +3–5% | +15–20% | ↓ <3.85% | 100+ bps |
The Bottom Line
Barring a dramatic last-minute shift, Jerome Powell will deliver a quarter-point cut on Wednesday and then spend 45 minutes trying to convince the world that the Fed is neither behind nor ahead of the curve — just perfectly data-dependent in an increasingly uncertain environment.
For investors, the real fireworks won’t be the rate decision itself, but the subtle calibration of Powell’s language and the new dot plot. One misplaced word about tariffs, AI, or his own future could send trillions of dollars sloshing across global markets.
The press conference will be streamed live on the Federal Reserve’s YouTube channel and website starting at 2:30 p.m. ET. In a year that has seen Bitcoin triple, the S&P 500 hit new highs, and inflation fall from 9% to near 2%, Jerome Powell’s final performance of 2025 may determine whether the party continues into 2026 — or whether the hangover arrives early.