Fed December 2025 FOMC Preview: Hawkish Cut Prediction and Market Outlook

The event centers on a Seeking Alpha preview [1] of the U.S. Federal Reserve’s December 9-10, 2025, FOMC meeting, published on December 7 (a non-trading day for U.S. markets). The report forecasts a 0.25% reduction in the Federal Funds rate, moving the target range to 3.50-3.75%. Crucially, it frames this cut as “hawkish” due to the expectation of a prolonged pause in rate adjustments afterward, which could disappoint market participants anticipating a more dovish path in 2026.

Latest pre-meeting market data (December 5, 2025) [0] shows major U.S. indices at elevated levels: S&P 500 (6,870.40), NASDAQ Composite (23,578.13), and Dow Jones Industrial Average (47,954.99). Corroborating sources [0] indicate the broader market has priced in a 25bp cut but is highly sensitive to the Fed’s forward guidance and dot plot projections, which will clarify the central bank’s 2026 rate trajectory.

1. Timing Impact
   : The article’s publication on a non-trading day (Sunday) means immediate market reaction data is unavailable; any market movement tied to the report will likely manifest post-FOMC decision on December 10.
2. Forward Guidance as Catalyst
   : The “hawkish” characterization stems not from the rate cut itself but from the expected long pause, highlighting that future policy communication is the primary market driver.
3. Consensus Sensitivity
   : With the market already pricing in a 25bp cut, the Fed’s guidance on 2026 policy will be the critical determinant of short-term direction, with hawkish signals risking a correction [0].

• Risks
  : A Fed delivery of a hawkish cut (long pause) could trigger sell-offs in equities and fixed income as markets reprice rate cut expectations downward. Pre-meeting uncertainty may also lead to elevated short-term volatility.
• Opportunities
  : If the Fed’s guidance is more dovish than predicted (e.g., multiple 2026 cuts), markets could rally as rate cut expectations are reinforced.

This analysis reviews a Seeking Alpha preview of the December 2025 FOMC meeting, which forecasts a 25bp rate cut with a prolonged pause (hawkish cut) and anticipates a negative market reaction. Published on a non-trading day (Dec 7), latest pre-meeting market data (Dec 5) shows major U.S. indices at 6,870.40 (S&P 500), 23,578.13 (NASDAQ), and 47,954.99 (DJIA). Market consensus expects a 25bp cut but is focused on Fed forward guidance, which will clarify 2026 policy direction. The actual rate decision and market reaction will be known post-FOMC announcement on December 10.