Fed minutes show officials were in tight split over December rate cut

## Fed Minutes Reveal a Divided Committee on Interest Rate Cuts

The Federal Reserve’s December meeting minutes, released on Tuesday, paint a picture of a committee deeply divided on the direction of monetary policy. While a rate cut was ultimately approved, the discussions reveal significant disagreement and uncertainty about the economic outlook.

• Close Vote: The Federal Open Market Committee (FOMC) voted to lower interest rates by a quarter-percentage point, but the 9-3 vote was the most dissents since 2019, indicating a close call.
• Conflicting Views: Officials expressed varied opinions, with some favoring further cuts and others wanting to hold steady. Concerns about inflation and the labor market were central to the debate.
• Economic Outlook: The committee generally expects moderate economic growth but sees risks to both employment and inflation.
• Future Rate Cuts: The “dot plot” suggests the possibility of another cut in 2026 and one more in 2027.
• External Factors: Officials acknowledged the impact of President Trump’s tariffs on inflation, but largely viewed it as temporary.
• Data Uncertainty: The minutes noted that reports are still trailing as government agencies round up data from the dark period during the government shutdown.
• New Faces: The committee’s composition is about to change, with four new regional presidents rotating into voting roles, some of whom have expressed opposition to further cuts.
• Bond Buying: The Fed also voted to resume its bond-buying program to calm pressures in short-term funding markets.

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