Fed minutes show deep split over when and how much to cut rates

Minutes from the Federal Reserve’s December meeting show officials sharply divided over the timing and size of any further interest-rate cuts as they weigh rising unemployment against persistent inflation. Members were uncertain how restrictive policy is with the federal funds rate at 3.5 percent to 3.75 percent, a level Chair Jerome H.

Powell said left the Fed "well positioned to wait to see how the economy evolves." Most officials said further cuts would likely be appropriate if inflation continued to decline, arguing cuts could help "forestall the possibility of a major deterioration in labor market conditions." But several officials preferred holding rates steady "for some time" to better judge policy effects and gain confidence that inflation would return to the 2 percent target.

The December decision was a 9-to-3 vote for a quarter-point cut, with Austan D. Goolsbee and Jeffrey R. Schmid dissenting to keep rates unchanged and four others recording "soft" dissents by forecasting year-end rates at the prior level. Stephen I. Miran voted for a larger, half-point reduction.

Dissenters cited worry that inflation has stayed above 2 percent for years and that the full effects of tariffs could yet rekindle price pressures. Supporters of deeper cuts pointed to a cooling but weakening labor market and the risk of a faster rise in unemployment. The Fed’s view was clouded by a government shutdown that delayed key data before the meeting.

Key Topics

Sports, United States, Business, Federal Reserve, Interest Rates, Inflation, Unemployment