• Wells Fargo's chief economist Sarah House recommends a 25 basis point Fed rate cut in December 2025
  • The call comes despite ongoing above-target inflation and recent strong job growth
  • The bank acknowledges the decision remains closely contested among policymakers

Wells Fargo & Company is making a bold call for Federal Reserve action next year, with Chief Economist Sarah House publicly recommending the central bank cut interest rates by 25 basis points in December 2025. The recommendation comes as the bank cites easing inflation pressures and emerging signs of labor market slack, even as inflation remains above the Fed's target and job growth has shown recent strength.

House's position puts Wells Fargo at odds with more hawkish Fed watchers who argue that persistent inflation and solid economic data warrant maintaining current restrictive policies. According to people familiar with the matter, internal discussions at the bank acknowledged the close nature of the decision, with some economists expressing concern about moving too quickly given inflation's stickiness in recent quarters.

"The data are increasingly pointing toward sufficient disinflation and labor market normalization to warrant policy adjustment by December," House said in a statement to colleagues, according to sources who heard her remarks. She emphasized that while the call was firm, the bank recognizes the Fed's decision remains "finely balanced" given competing economic signals.

Wells Fargo's recommendation comes against the backdrop of the bank's own strong financial performance. The institution reported Q3 2025 net income of $5.6 billion, a 9% increase year-over-year, with revenue reaching $21.43 billion. The bank's wealth and investment management arm saw particularly strong results, with net income rising 12% annually.

The rate cut call reflects Wells Fargo's assessment that economic momentum may slow sufficiently over the coming year to justify monetary easing. Bank analysts point to emerging signs of consumer strain and moderating business investment as factors that could tip the scales toward rate cuts, despite current economic resilience.

Market participants are closely watching for similar calls from other major institutions. While most banks expect eventual rate cuts, the timing remains hotly debated, with many forecasting later moves in 2026. The divergence in views highlights the uncertainty surrounding the economic outlook and the challenges facing Fed policymakers.

Wells Fargo representatives did not immediately respond to requests for additional comment on the rate call. The bank's public stance on monetary policy represents one of the more definitive positions taken by a major financial institution regarding 2025 Fed actions.

Correction: An earlier version of this article misstated the percentage increase in Wells Fargo's Q3 2025 revenue. The correct figure is 5% year-over-year.