Fed Officials Markedly Split Over Policy Path Ahead, December Meeting Minutes Show

03:44 PM EST, 12/30/2025 (MT Newswires) -- Federal Reserve officials appeared to be markedly divided over the potential monetary policy path ahead amid continued concerns about high inflation and labor market weakness, minutes from the central bank's Dec. 9-10 meeting showed Tuesday.

At the meeting, the Federal Open Market Committee delivered a third straight 25-basis-point interest rate cut amid ongoing concerns about the health of the labor market. Three officials dissented from the majority, with Governor Stephen Miran preferring a 50-basis-point reduction and Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid voting in favor of a no-change stance.

"Participants expressed a range of views about the restrictiveness of the committee's policy stance," the meeting minutes showed Tuesday. "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."

A "few" of the participants in favor of a cut at the December meeting indicated the decision was "finely balanced" or that they could have supported holding rates steady, according to the document. Some officials appeared to favor keeping rates unchanged "for some time" following a cut this month. All agreed, however, that monetary policy should remain data dependent, the minutes indicated.

"In discussing risk-management considerations that could bear on the outlook for monetary policy, participants generally judged that upside risks to inflation remained elevated and that downside risks to employment were elevated and had increased since the middle of 2025," the minutes showed. Inflation remained above policymakers' 2% target, the document indicated.

The probability that the FOMC will keep interest rates unchanged next month rose to about 85% Tuesday from 83% Monday, according to the CME FedWatch tool. The remaining odds are in favor of a quarter-percentage-point cut.

"There's a high degree of uncertainty heading into next year, with key policymaker changes, including a new chair," BMO Capital Markets Senior Economist Priscilla Thiagamoorthy said in a report published Tuesday. "We continue to expect three (25-basis-point) rate cuts through 2026."

The Fed's Summary of Economic Projections showed Dec. 10 the median federal funds rate at 3.4% at the end of 2026, unchanged from September. The 2027 and 2028 rate outlooks were also maintained at 3.1% each.

Earlier this month, Fed Governor Christopher Waller said the FOMC can afford to ease monetary policy further amid continued concerns regarding the labor market. Waller is reportedly among the potential candidates to replace Jerome Powell as the next Fed chair. Powell's term as Fed chair is set to expire in May.

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