Fed's December Rate Cut Expectations Rise to 82.7% as Waller and Daly Signal Support

Fed Governor Christopher Waller stated on November 25, 2025, that he advocates for a rate cut at the December FOMC meeting, citing a weak job market near stall speed and inflation expectations well-anchored near the 2% target. He noted tariffs represent one-time price shocks without acceleration risks and highlighted that firms are deferring hiring due to AI investments and weak consumer spending among low- and middle-income households.

San Francisco Fed President Mary Daly also expressed support for a December rate cut, emphasizing that job market deterioration is more likely and harder to control than an inflation flare-up. She views current policy as mildly restrictive but appropriate, adding that the Fed can achieve the 2% target without raising unemployment.

According to the CME FedWatch Tool, the probability of a 25 basis point rate cut in December now stands at 82.7%, up from 17.3% for no change. This shift reflects the dovish signals from key policymakers amid balanced risks to price stability and employment.

U.S. Stock Markets Rally on Rate Cut Optimism

U.S. equities closed higher on November 25, 2025, with the Dow Jones Industrial Average rising 0.44%, the S&P 500 advancing 1.5%, and the Nasdaq Composite gaining 2.69%. The tech-heavy Nasdaq posted its best day since May, driven by renewed bets on Federal Reserve easing and positive economic signals.

The rally extended gains from Friday, with investors focusing on the improving outlook for monetary policy support amid signs of labor market softening.

Bitcoin Briefly Breaks $89,000 on Rate Cut Hopes

Bitcoin surged briefly above $89,000 during the session, reaching a high of $89,065 before settling at $88,337, up 1.64% over 24 hours. The move reflected market optimism around the elevated December rate cut probability and dovish Fed commentary, though the cryptocurrency remains down 27% from its October peak.

The short-lived breakout highlighted sensitivity to monetary policy signals, with trading volume exceeding $50 billion as investors positioned for potential further easing.

In summary, dovish remarks from Fed Governor Waller and San Francisco Fed President Daly have boosted December rate cut odds to 82.7%, fueling a strong rally in U.S. stocks—led by the Nasdaq’s 2.69% gain—and a brief Bitcoin push above $89,000, underscoring the market’s focus on easing expectations.