FOMC Minutes Show Differing Opinions on Rate Path

02:48 PM EST, 12/30/2025 (MT Newswires) -- While most Federal Open Market Committee participants supported lowering the target rate range for the federal funds rate at the Dec. 9-10 meeting, minutes of the meeting released Tuesday showed that decision to lower rates was a tighter call than previously suggested and that there was considerable disagreement of the path of policy going forward.

At the meeting, the FOMC decided to lower the federal funds rate target by 25 basis points to a range of 3.50% to 3.75%, with Fed Governor Stephen Miran again looking for a larger 50-basis point reduction and Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid wanting to hold rates steady.

The minutes showed that a few of the 10 voters that supported a reduction said that the decision was "finely balanced or that they could have supported keeping the target range unchanged."

Those supporting the reduction said that downside risks to employment had intensified, that concerns about inflation had diminished and that lowering rates at this point was forward looking in line with the Fed's dual mandate.

However, participants who wanted to hold rates steady were concerned about a resurgence of inflation expectations and cited a lack of timely data due to the federal government shutdown.

Looking ahead, most participants said that further rate reductions would be appropriate if inflation continued to slow, suggesting that there was lower probability that tariffs would result in continued inflation pressures, but some participants said that it would be appropriate to hold interest rates unchanged "for some time" after the December reduction.

"A few participants observed that such an approach would allow policymakers to assess the lagged effects on the labor market and economic activity of the Committee's recent moves toward a more neutral policy stance while also giving policymakers time to acquire more confidence about inflation returning to 2%," the minutes showed, though all participants agreed that monetary policy would continue to be dictated by incoming data, the outlook and the balance of risks.

The updated Summary of Economic Projections released at the meeting still sees a median of only one rate cut in 2026, likely due to higher expectations for GDP, one more rate cut in 2027, and no rate cuts in 2028, all the same as in the previous SEP.

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