Fed Hawks Roar: Four Officials Warn Against 2025 Rate Cuts

What happened

Four officials warned against moving too quickly after the Federal Open Market Committee trimmed the policy rate by 25 basis points to 3.75%–4.00%. Dallas Fed President Lorie Logan said she did not see a need to cut this week and would find a December reduction difficult without clearer disinflation or labor cooling. Cleveland Fed President Beth Hammack said policy is barely restrictive, so holding steady would have been preferable. Atlanta Fed President Raphael Bostic said he only “eventually got behind” the cut, remaining uneasy as policy inches toward neutral. Kansas City Fed President Jeff Schmid, a voter who dissented, argued that another 25bp cut would not help jobs, but could undercut the 2 percent goal. Together, these remarks explain why Chair Jerome Powell stressed that a December cut is not a foregone conclusion. Fed hawks roar, and markets listened.

How the latest decision set the stage

The committee voted 10–2 to reduce rates, the second straight quarter-point move, citing softer labor momentum and still-elevated inflation. After the announcement, Powell reminded investors that future rate cuts in 2025 are conditional, not promised, and that views on the committee differ strongly. Pricing for another move in December fell after his remarks. Four officials warn against 2025 rate cuts, and that guidance matters for risk assets.

Why the officials are cautious

The hawkish tone centers on inflation that is too high and returning to target too slowly, even as hiring cools. Hammack and Logan emphasized that the labor market still appears balanced, so aggressive easing risks re-accelerating prices. Schmid highlighted structural forces in technology and demographics that could mask underlying demand, so cutting rates may do little for jobs while denting credibility on inflation. Bostic, long cautious, echoed that the policy rate is approaching neutral, which narrows room for error. These are classic hawks, officials who warn against rate cuts until inflation progress is assured.

The data constraint

A government shutdown has paused some official economic releases, which complicates the signal extraction that typically guides policy. In the absence of timely data, district surveys and business outreach carry more weight, reinforcing a bias toward caution. That backdrop helps explain why Fed officials say a December move requires convincing evidence that inflation is cooling and the labor market is weakening.

Market reaction and odds

Equities and the dollar whipsawed around the decision and Powell’s comments. As the hawkish commentary circulated, futures trimmed the probability of a December cut and repriced the 2025 curve, consistent with a higher bar for additional easing. The phrase Fed hawks warn against 2025 rate cuts on inflation appeared repeatedly in trader notes, as participants shifted toward a slower glide path.

What it means for the path ahead

The committee is now split between those who see more cuts as labor insurance and those who see inflation risk as paramount. Logan and Hammack are not voting this year, yet their 2025 votes will matter if the economy stays near potential. Schmid’s dissent underscores that some voters already prefer to hold. Bostic’s reluctant support for the latest move suggests that even moderates want clearer proof that prices are trending toward 2 percent before endorsing more reductions. In this setting, rate cuts in 2025 will likely be fewer and later unless inflation declines faster than expected.

Sector and asset implications

Rate-sensitive sectors, such as housing and small-cap credit, benefit from lower yields, but the tenor of guidance matters. If the Fed signals fewer cuts, mortgage and corporate curves can remain sticky, limiting relief. Banks and money-market funds may hold deposit pricing higher for longer. For equities, a slower easing cycle can favor profitable growth with pricing power, and firms with low refinancing needs. For bonds, the front end is most sensitive to any change in December odds, while the long end will watch inflation-risk premia and the path of balance-sheet policy.

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What to watch next

Three signposts will steer December and early 2025 pricing: first, incoming inflation prints and wage measures once reporting resumes; second, jobless claims and private payroll proxies that can fill the data gap; third, fresh communications, including speeches from the same officials who argued to hold this week. Any downside surprise in prices, or a clear softening in employment, would raise the odds of another cut; sticky inflation would keep the bar high

Bottom line

Fed hawks roar after a hawkish cut, four officials warn against 2025 rate cuts on inflation, and the bar for December is higher. Until evidence shows faster disinflation or a cooler labor market, the path of policy looks slower, later, and more conditional.