Nearly everyone on Wall Street agrees: the Fed is cutting rates on Wednesday. Futures markets say there's an 88% chance, according to the CME FedWatch tool. Over on Polymarket, the betting crowd is even more confident at 95%. Basically, another quarter-point cut is treated as a done deal.

Except one Italian bank didn't get the memo.

Milan-based UniCredit is the lone contrarian, calling for the Fed to hold rates steady. If they're right, someone who bet $10 on a hold would pocket $200. Those are the kind of odds that make you wonder if they know something everyone else doesn't—or if they're just spectacularly wrong.

UniCredit's Lonely Call

Market News surveyed 33 investment banks about Wednesday's Federal Reserve decision. Thirty-two expect a 25-basis-point cut. UniCredit? Not so much.

In a research note from last week, Daniel Vernazza, UniCredit's chief international economist, acknowledged the outcome is "a close call" but said the bank expects the Fed to stay put. "The outcome of the FOMC meeting remains a close call, in our view. Indeed, we expect the Fed to remain on hold, despite forward rates currently pricing in more than a 90% likelihood of a rate cut," the note explained.

According to UniCredit, this meeting could be one of the most contentious in years. Fed officials appear genuinely divided about whether to keep the easing cycle rolling or hit pause after cutting twice already. Fed Chair Jerome Powell said back in November that a December cut was "far from" certain, though New York Fed President John Williams later suggested there might be room for more near-term adjustments.

What makes this particularly messy is that the Fed is flying somewhat blind. Key employment and inflation data for October and November have been delayed, forcing policymakers to lean on alternative indicators—including private-sector employment numbers that have sent mixed signals at best.

If the Fed does cut, it would track with the September "dot plot" projections showing two cuts by year-end. But UniCredit analysts argue that missing data and the reality that Powell's term ends in May could diminish how much weight those projections actually carry.

What Happens If UniCredit Is Right?

Markets are priced for a cut. If the Fed surprises everyone with a hold, expect some serious turbulence.

Vernazza suggested a surprise pause would likely strengthen the U.S. dollar, though the full market reaction would depend heavily on how stocks and bonds respond and what Powell says in his press conference afterward.

UniCredit's broader view is that the Fed will only cut twice more in 2025, bringing the federal funds rate to a range of 3.25% to 3.50% by the end of 2026. Their argument: core inflation and overall economic conditions don't really justify more easing from a macroeconomic perspective.

Consider where markets are right now. The S&P 500—tracked by the Vanguard S&P 500 ETF (VOO)—is sitting less than a percentage point away from all-time highs. Meanwhile, the VIX volatility index is trading just above 16, near its lowest levels of the year after spiking to 27 in November.

In other words, markets look remarkably calm and comfortable. Maybe too comfortable.

That's what makes UniCredit's call interesting, even if it's probably wrong. When everyone agrees on something in markets, and optimism gets baked into prices, surprises hurt more. A Fed hold on Wednesday would force investors to reconsider a lot of assumptions in a hurry.

Is UniCredit's forecast likely? Probably not. The odds say they're wrong. But if they turn out to be right, we're all going to feel it.