The American Financial Services Association (AFSA) has announced that financial markets anticipate the Federal Open Market Committee will issue another quarter-point rate cut in December. This expectation comes as policymakers weigh elevated core inflation against softer job growth, according to the group's newsletter.
The Federal Reserve has already lowered its benchmark federal funds rate twice in 2025, implementing quarter-point cuts at its September and October meetings. These adjustments brought the target range down to 3.75%–4.00%. According to derivatives pricing tracked by the CME FedWatch tool, markets see an approximately 80%–90% chance of another 25-basis-point cut ahead of the December 9–10 meeting, reflecting growing expectations of continued easing.
Recent inflation data indicate that price pressures are moderating but remain above the Fed’s 2% objective. Labor Department figures show headline consumer prices rose about 3.0% year over year in September 2025. Estimates of core inflation, excluding food and energy, also hovered near 3.0%, which officials describe as "somewhat elevated" even after a year of gradual cooling from post-pandemic peaks.
Federal Reserve Economic Data reveals that U.S. payroll employment has slowed from earlier rapid gains while the unemployment rate has increased from its 2023 low, signaling a gradual cooling in labor demand. The Fed's dual mandate requires it to support maximum employment as well as price stability; thus, this softening job market strengthens the case for further interest rate cuts.
Founded in 1916, AFSA is the primary national trade association for the U.S. consumer credit industry. It represents companies involved in vehicle finance, personal loans, credit cards, mortgages, and other forms of consumer credit. AFSA advocates for policies that preserve access to responsible credit, promotes compliance and best practices, and provides research and education to support its member firms.
