To Cut or Not to Cut – Nov. 3, 2025
A lack of data is making another rate-reduction move an iffy proposition for December
The Federal Reserve ended the month of October with another quarter-point rate cut, as was widely predicted. However, it’s not certain that the central bank’s Federal Open Market Committee will make it a three-peat when it convenes again in December.
One argument holds that having regained the rate-cutting momentum that was put on hold for most of 2025, the Fed will want to keep going. “The data has to disqualify further easing, and that’s a higher hurdle,” Vincent Reinhart, a former senior Fed adviser who is now chief economist at BNY Investments, told the Wall Street Journal.
Given a shutdown-induced blackout on the federal economic and employment data that the Fed normally would use to determine its policy moves, Reinhart added, “It’s really hard for them not to cut in December. It’s easier to keep on going than stop.”
Fed Chair Jerome Powell was less certain at a news conference following the FOMC announcement. Among the factors he cited was the very same data blackout cited by Reinhart.
Should the lack of data create a high level of uncertainty come the December meeting, “that could be an argument in favor of caution” about cutting the effective federal funds rate again, Powell told reporters. He added that at the October FOMC meeting, policymakers brought “strongly different views about how to proceed in December.”
Already at the October meeting, there were two dissents, for very different reasons: Kansas City Fed President Jeffrey Schmid voted against cutting the EFFR at this time, while Fed governor Stephen Miran wanted a 50-point cut, rather than the 25-point cut that was enacted.
Presumably, the shutdown that began on Oct. 1 will have ended by the time the FOMC convenes and policymakers will have current data to inform their decisions. The data may not shine a bright light on the road ahead, though.
Although preliminary ADP data for private-sector employment in October showed steady hiring following a loss of 32,000 positions in September, business headlines lately have conveyed news of large-scale layoffs, notably in the tech sector. Moreover, the pace of hiring between June and August was less than half what it was a year ago, according to the most recent U.S. Labor Department data available.
The WSJ reported that the decline in the inflation rate that we saw in 2023 and 2024 has decelerated, due in large measure to higher prices resulting from the White House’s imposition of broad-based tariffs.
For commercial real estate investors and owners, the current Fed stance is both a call to action and a reason for caution. Gary Bechtel, CEO of Red Oak Capital Advisors, posted on LinkedIn, “Lower short‑term rates can improve bridge‑loan terms and enhance exit planning for repositioned assets.” Simultaneously, though, “Inflation is sticky, credit concerns persist; underwriting discipline remains critical.”
Bechtel added, “If you’re sponsoring a value‑add multifamily, industrial or retail repositioning, this rate move is a call to revisit: loan structure, stabilization timeline, exit cap‑rate sensitivity.” Responding to Bechtel’s posting, Dr. Adam Gower also advocated getting into the arena: “Rates will continue to come down,” he wrote. “Liquidity is set to skyrocket. It’s time to exit overpriced stocks and move into underpriced CRE before the recovery kicks in hard.”
As they say at the Indianapolis 500, “Gentlemen, start your engines.”