BNY's Vincent Reinhart Expects Split December Fed Rate Cut Amid Market Uncertainty

This analysis is based on the CNBC ‘Money Movers’ interview with Vincent Reinhart, BNY Investments Chief Economist and former Federal Reserve official, published on November 14, 2025 [0]. Reinhart stated he expects another rate cut in December but anticipates the Federal Open Market Committee (FOMC) vote will likely be split, highlighting growing division among policymakers.

The markets displayed divergent performance on November 14, with the S&P 500 gaining 1.46% to 6,769.63, NASDAQ Composite surging 2.23% to 23,048.32, while the Dow Jones managed only a modest 0.26% increase to 47,345.21 [0]. The Russell 2000 outperformed with a 1.71% gain to 2,399.54 [0].

Most significantly, market expectations for a December rate cut have collapsed dramatically. According to CME FedWatch data, the probability has fallen from 96% a month ago to just 47.4% as of November 13 [1]. This represents a more than 50 percentage point decline in rate cut expectations, reflecting growing uncertainty about the Fed’s policy direction.

The market showed clear sector differentiation that suggests some participants are still pricing in potential monetary easing. Utilities led gains with a 4.14% increase, followed by Energy (+3.15%), Technology (+2.65%), and Financial Services (+1.83%) [0]. These rate-sensitive sectors’ strength contrasts with underperformance in Communication Services (-2.01%), Basic Materials (-0.69%), and Consumer Defensive (-0.57%) [0].

Reinhart’s expectation of a split vote is supported by recent FOMC dynamics. The October meeting was not unanimous, with two members voting for opposite policy moves [2]. Fed officials are divided between those favoring more cuts and others preferring to pause [2]. Boston Fed President Susan Collins, a voting member and centrist, has expressed hesitation about further easing without clear evidence of labor market deterioration [1].

The situation is complicated by the recent U.S. government shutdown, which has significantly limited the availability of official economic data, leaving policymakers “flying blind” [1]. Some October labor market and inflation data may not be released at all [2], creating an information vacuum that compounds existing FOMC divisions.

The economic picture remains ambiguous, with conflicting indicators:

: Consumer spending and corporate earnings point to robust growth [2]
: Private data shows over 150,000 job cuts in October, declining apartment rents, slowing car sales, and consumer sentiment approaching record lows [2]

The combination of FOMC division and data constraints creates unprecedented policy uncertainty. Reinhart’s insider perspective as a former 24-year Fed veteran suggests the split vote expectation reflects genuine disagreement rather than strategic positioning. This environment historically leads to increased market volatility and potential policy missteps.

The dramatic decline in rate cut probabilities from 96% to 47.4% within a month represents a significant psychological shift in market expectations. This suggests markets are rapidly adjusting to the reality that the Fed’s easing cycle may be pausing, despite continued economic uncertainty.

The government shutdown has created a crisis of data reliability that may persist through the December meeting. Policymakers and market participants must increasingly rely on private sector data, which may have different methodologies and reliability standards than official government statistics.

Key risks include:

1. Policy Mistake Risk
   : Acting on incomplete or misleading data could result in inappropriate policy action
2. Market Volatility
   : The sharp decline in rate cut probabilities suggests markets are highly sensitive to new information
3. Economic Deterioration
   : Private sector data indicating labor market weakness could accelerate if not addressed through appropriate policy

1. Information Advantage
   : Market participants with access to high-quality private economic data may have an analytical edge
2. Sector Rotation
   : The divergence between rate-sensitive and defensive sectors may present tactical opportunities
3. Volatility Management
   : Options strategies could benefit from increased policy uncertainty

The analysis reveals a complex situation where Vincent Reinhart expects a December rate cut but anticipates a split FOMC vote, reflecting genuine policy division [0]. Market probability of rate cuts has fallen dramatically from 96% to 47.4% [1], while sector performance shows mixed signals about rate expectations. The U.S. government shutdown has created a significant data vacuum, complicating the Fed’s decision-making process [1, 2]. Economic signals remain mixed, with robust consumer spending contrasting with private data showing labor market weakness [2]. This environment of policy uncertainty combined with data constraints creates both risks and opportunities for market participants.