The Fed released the minutes from its December Federal Open Market Committee (FOMC) meeting on Tuesday, reiterating a sharp divide on key issues including inflation, the labor market, and the rate path outlook.
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Earlier this month, the central bank voted 9-3 to cut rates by 25 bps, although those in support “indicated that the decision was finely balanced or that they could have supported keeping the target range unchanged.” Some policymakers believe the risk of rising inflation and a softening labor market have cooled in recent months, while others remain concerned that inflation has remained persistently above 2% in 2025.
Fed Balances Inflation and Labor Market Risks
In addition, a few officials said that the December rate cut was “not justified” because available data did not show a further weakening of the labor market. Furthermore, the government shutdown contributed to a blackout of economic data that left the Fed in the dark on key inflation and labor market indicators.
Most officials said they would support additional rate cuts as long as inflation eases down to the 2% target, while some were in favor of keeping “the target range unchanged for some time” to assess the effects of recent rate cuts on the economy.
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