Federal Reserve Minutes Reveal Deep Divide Over December Interest Rate Cut
Minutes from the December Federal Reserve meeting reveal a deep divide over monetary policy, culminating in the approval of a quarter-point rate cut after a nuanced debate about the risks facing the US economy.
The Federal Reserve lowered its target rate range to 3.5%-3.75%, marking the third consecutive cut amid a slowdown in monthly job creation and rising unemployment.
However, the decision was not unanimous: six officials opposed the cut, including two dissenting voting members. Some participants preferred to hold rates steady, reflecting concerns that progress toward the 2% inflation objective had stalled.
The meeting featured an unusual split in opinions over two consecutive meetings, with dissent occurring both in favor of tighter and looser policy.
Some officials argued that a rate cut could help stabilize the labor market, while others cautioned against premature easing.
Projections released after the meeting suggest only one additional rate cut is expected next year, with a likely hold on rates until inflation falls or unemployment rises more significantly than anticipated.
The 43-day government shutdown resulted in a gap in economic data, influencing the outlook. Key data releases scheduled for January, including jobs on January 9 and the Consumer Price Index on January 13, were particularly awaited.
The Federal Reserve's next meeting is scheduled for January 27-28, with market expectations favoring an unchanged policy rate.
