Powell Pumps the Brakes: December Cut Not a Done Deal

The Federal Reserve cut rates again yesterday, another 25 basis points, bringing the fed funds range to roughly 3.75% - 4.00%. But before anyone starts booking their next haircut, Jerome Powell made one thing clear: December is not a done deal.

In his words, there are “strongly differing views” on whether another cut makes sense this year, with “a growing chorus” suggesting the Fed should “at least wait a cycle.” Translation: the committee just entered its holiday debate season early.

The headline is caution. The undercurrent is division. And the tone? One part pragmatic, one part déjà vu.

Jerome Powell’s Key Takeaways

• December on the Bubble: Powell stressed that a follow-up cut in December is “not a foregone conclusion.” That’s Fed-speak for we’re not sure if we did too much, too little, or just enough, but let’s not rush to find out.
• Tariffs and Inflation Math: He estimated that tariffs are contributing about five to six-tenths of a percent to core PCE inflation, the Fed’s preferred gauge. Without them, Powell said, core PCE would likely be running closer to 2.3% - 2.4%. So, inflation might be cooler than the headline data suggests, assuming Washington doesn’t find new things to tax coming off a ship.
• Dissenters from Both Ends: There were two votes against the move. Stephen Miran, newly minted Fed governor (and still humming “I Like Big Cuts” from last month’s meeting), wanted a 50 bp cut, while Kansas City Fed President Jeffrey Schmid wanted no cut at all. The other ten members stuck with 25 bps, splitting the difference and, apparently, the room.
• Flying Blind: Powell also acknowledged that, thanks to the government shutdown, the Fed is missing some of its usual economic data, meaning this decision leaned more on private and high-frequency data. When the world’s largest economy is flying on “sentiment” readings, you know the confidence meter is working overtime.
• No Risk-Free Path (Still): The official statement repeated the familiar line that “there is no risk-free path.” Today’s decision leaned toward the side of labor-market weakness rather than inflation risk. That’s a subtle but important shift, a quiet admission that employment, not prices, now has their attention.

Market Response

• Equities: Markets flinched at Powell’s lack of conviction, then collectively decided it wasn’t worth the drama. The S&P 500 finished roughly flat, the Nasdaq managed a modest gain, and the Dow slipped a touch — a reaction best described as mildly entertained, not impressed.
• Bonds: The 10-year yield ticked higher after Powell’s comments, as traders priced in a longer wait for any follow-up cuts.
• Dollar: The greenback strengthened modestly, and futures markets cut back odds of a December rate cut after Powell’s press conference.
• Gold: Continued its steady run, fueled by lower real yields, geopolitical anxiety, and investors hedging against everything that isn’t nailed down.

Members Wealth Takeaway

We’re in what you could call a policy sweet spot, inflation is cooling, tariffs are less of a drag than feared, the Fed is cutting (if reluctantly), Tax cut tailwinds, ample liquidity, and loose financial conditions. On paper, that’s fertile ground for a continued bull run.

Of course, to believe that story, you need to squint past a few details: stretched valuations, a growing national deficit, AI-fueled bubble talk, a concentrated and thematic stock market and consumer credit cracks that are starting to look less like chips in the glass and more like the kind that eventually need a full windshield replacement.

At Members Wealth, we see this as a time for measured discipline, not complacency. Talk to one of our advisors about your individual goals and possibly trimming risk assets to the low end of your target allocation range. It’s not about timing the next Fed move; it’s about staying positioned for whatever “not a done deal” looks like next.