A contentious year for the United States' central bank is expected by analysts to end with more dissents and uncertainty – two themes that have emerged in recent Federal Reserve meetings.

Fed watchers mostly expect a third consecutive rate cut when the Federal Open Market Committee concludes its final meeting of 2025 on Dec. 10. Still, for those looking to the Fed for relief from high prices, a December rate cut isn't guaranteed – Chair Jerome Powell said as much at the end of the last Fed meeting.

Analysts expect multiple dissents alongside another quarter percentage point rate cut.

“Generally speaking, the Board of Governors has a dovish skew, while the regional Fed presidents Fed presidents—who do not all vote—lean more hawkish,” Wells Fargo economists said in a Dec. 4 note. “While we expect opposition in both directions of the policy decision again, more dissents are likely to be in favor of keeping the policy rate unchanged.”

Why are Fed officials divided?

Several Fed officials have cautioned that potential tariff-driven inflation pressures shouldn't be dismissed, according to James Knightley, chief international economist at ING.

“The economy is still growing, equity markets are at all-time highs and unemployment remains very low so to them, there doesn’t appear to be a pressing need to cut rates again,” Knightley said to USA TODAY. “However, the more dovish members of the Fed argue that the second part of their mandate, maximizing employment, is looking more challenged.”

Private-sector lay-off data, a downbeat assessment on the economy from the Fed’s own Beige Book, and New York Fed President John Williams seemingly breaking in favor of a rate cut, add to the case for another cut, Knightley said.

As of Dec. 7, the CME FedWatch tool predicted the Federal Open Market Committee will lower its target range for the federal funds rate by a quarter percentage point, down to 3.5% to 3.75%.

The last meeting of a high-pressure year

Jon Hilsenrath, a senior advisor at StoneX, said he expects “a very divisive” December meeting to cap off a high-pressure year.

Since President Donald Trump returned to office in January, he has repeatedly attacked Powell in an effort to browbeat the Fed into lowering rates. In April, Trump said Powell’s “termination cannot come fast enough!”

Soon, the president may get his wish. While Powell’s term on the Fed’s Board of Governors expires in 2028, his term as chair will end in May 2026. The president is expected to nominate Powell’s replacement early next year.

His latest appointment to the Fed, Gov. Stephen Miran, prompted concerns about the Fed’s independence as Miran took a leave of absence, but did not resign, from his role as chairman of the White House’s Council of Economic Advisers to join the central bank.

The president also attempted to fire Fed Gov. Lisa Cook in August over allegations she had lied on two home mortgage applications in 2021. Cook said Trump lacked authority to oust her and that she planned to challenge the move in court, according to a statement from her attorney. In October, the Supreme Court said Trump couldn't terminate Cook immediately and that it would take up the case in January.

Trump’s abrupt dismissal of U.S. Commissioner of Labor Statistics Erika McEntarfer, following a disappointing jobs report, also stirred up controversy. Trump then nominated Heritage Foundation economist E.J. Antoni to lead the agency. After economists and lawmakers raised concerns about the quality of BLS data under Antoni’s leadership, Trump withdrew the nomination.

Most recently, Treasury Secretary Scott Bessent said he plans to advocate for a requirement that Fed presidents reside in their districts for at least three years before they could be appointed to their positions. If not, he said, “we’re going to veto them.”

“The statistical agencies and the Fed are ending the year with their credibility in question,” Hilsenrath said. “(Trump) is prepared to push very aggressively against the Fed, but he tends to pull back a little bit when he sees that the markets get unnerved.”

Data gap muddies economic outlook

The Federal Open Market Committee is still without recent key economic data, further complicating matters.

After the federal government shutdown delayed data collection and dissemination, the BLS canceled the October inflation and jobs report, but said partial data for that month will be included in November reports. It also postponed the November jobs report to Dec. 16 and the November inflation report to Dec. 18.

The latest Consumer Price Index for September showed inflation at 3%, higher than the Fed’s 2% target. The September jobs report found U.S. employers added 119,000 jobs in September, though the unemployment rate rose slightly from 4.3% to 4.4%.

Private-sector reports have filled some of the data gaps created by the shutdown. A Challenger, Gray & Christmas report found U.S. employers announced 71,321 layoffs in November, down from 153,074 job cuts in October.

The ADP National Employment report, which is based on payroll data, found private employers shed 32,000 jobs in November.

Given how much data will be released before the Fed’s January meeting, a Bank of America Global Research report said their economists are skeptical Powell could be “credibly hawkish” at his Dec. 10 press conference.

“Powell is unlikely to get away from data dependence,” the report said. “We would not be surprised if markets start pricing a (January) cut more aggressively in the near term.”