Minutes from the Federal Reserve’s December meeting, released Tuesday, showed a divide among policymakers over whether to pause further interest rate cuts following the latest reduction, even as most officials said additional easing could be appropriate if inflation declines as expected.
The Federal Open Market Committee (FOMC) cut the federal funds rate by 25 basis points at its December 9 to 10 meeting, setting the target range at 3.5% to 3.75%.
According to the minutes, some members favored leaving rates unchanged for a period after the December cut to assess the lagged effects of earlier policy moves and to gain confidence that inflation is moving sustainably toward the Fed’s 2% goal.
By contrast, the minutes said that “most participants judged that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation declined over time as expected,” reflecting support for a gradual move toward a more neutral policy stance amid rising downside risks to employment.
Three officials dissented from the December decision. Stephen Miran preferred a larger, 50-basis-point cut, while Austan Goolsbee and Jeffrey Schmid voted to keep rates unchanged, citing concerns that inflation remained above target and had not shown sufficient progress.
Policymakers agreed that inflation was still somewhat elevated and that labor market conditions had continued to soften.
The minutes highlighted that monetary policy was not on a preset path and that future decisions would depend on incoming data and the balance of risks.
The FOMC’s next policy meeting is scheduled for January 27 to 28.