Author: Deng Tong, Golden Finance

On November 21, according to CME's "Fed Watch": the probability of the Federal Reserve lowering interest rates by 25 basis points in December is 39.6%, while the probability of maintaining the current rate is 60.4%. On the same day, Federal Reserve Vice Chairman and New York Fed President Williams stated that the Fed could lower rates "in the near future" without jeopardizing its inflation target. As a result of these remarks, the probability of a 25 basis point rate cut by the Fed in December rose to 61% on Polymarket. Today, according to CME's "Fed Watch" data: the probability of a 25 basis point rate cut in December has risen to 69.4%, while the probability of maintaining the current rate is 30.6%.

Before Williams' speech, the price of BTC had been continuously declining, even touching $82,000. Following the comments on rate cuts, the price of BTC began to slowly recover, reaching $87,067.46 at the time of publication.

White House economic advisor Hassett pointed out: the new leadership of the Federal Reserve may be poised to lower rates, and Trump may interview candidates for the Fed in the coming months, with a decision on the Fed chair likely to be made around the New Year. The market is currently focused on the Fed's FOMC meeting.

I. Voting Mechanism of the Federal Reserve FOMC Meeting

The decision-making of the Federal Reserve's Federal Open Market Committee (FOMC) adopts a majority vote system, where each voting member has an equal vote. The committee consists of 12 voting members, made up of two parts: permanent voting members and rotating voting members.

• All members of the Board of Governors (up to seven);
• President of the New York Federal Reserve Bank;
• 4 of the remaining 11 Reserve Bank presidents serve on a rotating basis for a term of one year.

The seven Reserve Bank presidents without voting rights attend the FOMC meetings and participate in the committee's discussions.

Voting Mechanism

• Majority Vote Decision: At the end of each two-day meeting, attendees vote on monetary policy proposals (e.g., whether to adjust the target range for the federal funds rate), and proposals that receive a majority vote will be adopted.
• Consensus: Despite the voting mechanism, FOMC members typically engage in extensive discussions and negotiations to seek consensus, ensuring that policy decisions have broad support and convey a unified message to the market.
• Dissent Record: If a voting member disagrees with the final decision, their dissent will be formally recorded in the meeting minutes, showcasing the diversity of opinions within the committee.

LPL Financial Chief Economist Jeffrey Roach stated: "In practice, committee members communicate closely between meetings, striving to reach consensus, but this does not guarantee that consensus will be achieved."

Achieving consensus among all Federal Reserve members helps convey a unified message to the market regarding the officials' views on their actions. Discrepancies in voting results may raise questions about whether the Fed believes its actions are correct and the motivations of Fed officials.

II. FOMC Voting Members and Their Views for 2025

Permanent Voting Members (Board of Governors and New York Fed President)

Jerome H. Powell, Chair (Board of Governors): Uncertain

On October 29, during a press conference following the Fed's decision to cut rates by 25 basis points, Powell stated that the rate cut may not last until December as widely predicted. "Further rate cuts at the December meeting are not a foregone conclusion, far from it. There are significant differences of opinion today. This shows that we have not yet made a decision on the rate trajectory for December." Powell acknowledged the Fed's difficult position, with economic trends pulling monetary policy in opposite directions. "We are currently facing a situation where inflation is at risk of rising, while employment is at risk of declining. We have only one tool… you cannot address both issues simultaneously."

John C. Williams, Vice Chair (New York Fed President): Leaning Towards Rate Cut

Williams stated at a meeting of the Central Bank of Chile that U.S. rates could decline without jeopardizing the Fed's inflation target, while also helping to prevent a downturn in the labor market. "I think monetary policy is slightly tight… therefore, I believe there is still room for further adjustments in the target range for the federal funds rate in the short term to bring the policy stance closer to neutral." Williams indicated that the Fed needs to achieve its inflation target "without posing excessive risks to the full employment goal."

Michelle W. Bowman, Fed Governor: Leaning Towards Rate Cut

Bowman stated after the FOMC's decision to cut rates for the first time since 2025 in September: "Now is the time for the committee to take decisive and proactive action to address the declining vitality of the labor market and signs of weakness. We are likely behind the curve in responding to the deteriorating labor market conditions."

Stephen I. Miran, Fed Governor: Leaning Towards Rate Cut

Miran explicitly supports a rate cut in December, deeming it "very appropriate." He emphasized on November 15 that the data since September has been generally dovish, supporting the Fed's dovish stance. Earlier, he suggested a 50 basis point cut, or at least a 25 basis point cut. He believes that if economic data does not change significantly, continuing to cut rates is "a consistent and reasonable choice." Miran, appointed by Trump, has faced questions about his independence—his radical stance has exacerbated divisions within the Fed.

Christopher J. Waller, Fed Governor: Leaning Towards Rate Cut

On November 17, Waller expressed his support for another 0.25 percentage point cut in December to help boost the weak U.S. labor market—and he doubts he will change his mind. Waller stated that based on surveys of consumers and businesses, as well as his contacts with large employers, he is convinced that labor market conditions have deteriorated. He noted that key employment data delayed due to a record 43-day government shutdown is likely to show results contrary to this. "The labor market remains weak, close to stagnation." Meanwhile, inflation has not risen significantly in recent months. He stated that the economic slowdown and high interest rates have suppressed consumer spending, helping to control inflation. "Given the signs of slowing economic growth and the weak labor market potentially leading to moderate wage growth, I see no factors that would accelerate inflation."

Michael S. Barr, Fed Governor: Cautious on Rate Cut

On November 20, Michael Barr stated: "I am concerned that the inflation rate is still around 3%, while our target is 2%. So we need to be cautious with monetary policy now, as we want to ensure we achieve both aspects of our mission."

Lisa D. Cook, Fed Governor: Uncertain

Cook stated in an interview with the Brookings Institution in Washington: "I decide my monetary policy stance at each meeting based on the latest data from various sources, changes in my expectations, and the balance of risks. Each meeting, including December's, is a live meeting."

Philip N. Jefferson, Fed Governor: Uncertain

On November 17, Jefferson noted: as the Fed relaxes policy to a point that may halt progress on slowing inflation, it needs to "proceed slowly" on further rate cuts. "In recent months, I believe the balance of risks in the economy has shifted, with the downside risks to employment increasing compared to the upside risks to inflation, which may have recently decreased." Jefferson will be guided by data and will take a "meeting-by-meeting" approach to decide policy. "At this point, this is an especially prudent approach." Before the December Fed policy meeting, "it remains unclear how much official data we will see."

2025 Rotating Voting Members (Regional Fed Presidents)

Susan M. Collins, Boston Fed President: Leaning Towards No Rate Cut

On November 12, Collins stated: due to concerns about high inflation, she believes the threshold for further easing monetary policy is "relatively high." "In the absence of clear evidence of a significant deterioration in the labor market, I would not easily ease policy, especially given the limited inflation information due to the government shutdown. In the current highly uncertain environment, it may be appropriate to maintain the policy rate at current levels for a period to balance inflation and employment risks."

Alberto G. Musalem, St. Louis Fed President: Leaning Towards No Rate Cut

On November 10, Musalem expressed clear skepticism about the prospects for further monetary easing. In a media interview, he stated: "We must act cautiously at this moment; this is crucial. I believe there is very limited room for further easing without making policy excessively loose." Musalem believes the current inflation rate is closer to 3% rather than the Fed's 2% target. He added that the financial environment, including stock valuations and housing prices, is at a high level; monetary policy is closer to neutral rather than mildly restrictive; and the labor market has already cooled in an orderly manner. "I believe we need to continue taking measures to curb inflation."

Jeffrey R. Schmid, Kansas City Fed President: Leaning Towards No Rate Cut

On November 14, Schmid stated that the potential role of further rate cuts in reinforcing high inflation would outweigh their supportive effect on the labor market: "I believe further rate cuts will not do much to mend the cracks in the labor market—these pressures are more likely to stem from structural changes in technology and immigration policy. However, rate cuts could have a more lasting impact on inflation, as they would increasingly raise doubts about our commitment to the 2% inflation target." This reasoning is guiding his thoughts on the upcoming December Fed policy meeting, and he added that he remains open to new information in the coming weeks.

Austan D. Goolsbee, Chicago Fed President: Cautious on Rate Cut

Goolsbee stated at an event of the Chartered Financial Analyst Society in Indianapolis that the process of inflation returning to 2% "seems to have stalled." "This makes me a bit uneasy."

In summary, among the 12 voters, four clearly lean towards a rate cut, while the other eight are uncertain or lean towards no rate cut.

III. External Expectations for the Fed's Rate Cut in December

• Barclays Research points out that there is still uncertainty regarding the Federal Reserve's interest rate decision next month, but Chair Powell is likely to push the FOMC towards a rate cut decision. Based on recent speeches, Barclays believes that Governors Miran, Bowman, and Waller may support a rate cut, while Regional Fed Presidents Musalem and Schmid lean towards maintaining the current rate. Governors Barr and Jefferson, along with Goolsbee and Collins, have shown that their positions are not yet clear but tend to favor the status quo. Governors Cook and Williams rely on data but seem to support a rate cut. Barclays states: "This suggests that before considering Powell's position, there may be six voters leaning towards maintaining the current rate and five leaning towards a rate cut." The bank adds that Powell will ultimately dominate this decision, as the threshold for governors to publicly oppose his stance is very high.
• CITIC Securities research report states that New York Fed President Williams hinted at a further rate cut in December, reversing market expectations for a rate cut, with the market now believing there is a 70% probability of a Fed rate cut in December. The Fed will enter its quiet period starting November 29, and Powell has no public speaking or media interview schedule before the quiet period; thus, Williams' remarks may be the last influential comments from a Fed official affecting market expectations. Continuing previous views, a "close call" rate cut of 25bps is expected in December. For the market, the reversal of rate cut expectations, combined with the advancement of the "28-point" plan and news of the Trump administration considering exporting H200 chips to China, means that macro factors will no longer be a source of pressure for the market in the short term. The market may focus more on issues such as AI companies issuing bonds and cryptocurrency trends.
• The probability of a 25 basis point rate cut by the Fed in December on Polymarket has risen to 67%.

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