The minutes of the meeting of the FED held on December 17-18, which included details about the 25 basis point cut, were published.
Here are the most important parts of the meeting minutes published by the FED:
- If the data plays out as expected, it would be appropriate to continue gradually moving toward a more neutral policy stance, participants said.
- Participants said the Fed is at or near a point where it is appropriate to slow the pace of easing.
- While participants expected inflation to continue moving toward the 2% target, the impact of possible trade and immigration policy changes suggested this process could take longer than previously expected.
- Some respondents said they included “temporary assumptions” about possible changes in trade and immigration policies in their forecasts.
- The majority of participants thought that it would be appropriate to lower the target range for the policy rate by 25 basis points at the December meeting.
- Participants expect labor market conditions to remain strong.
- Some participants believed it was necessary to keep interest rates steady at the December meeting, citing the increasing risk of persistent high inflation.
- Combining the latest data and assumptions about possible policy changes by the new administration, Fed officials expect GDP growth to be slightly lower than the previous baseline forecast, while the unemployment rate is expected to rise “slightly.”
- Many respondents think caution is warranted in the “coming quarters.”
- Most respondents believe that interest rate decisions are a delicate balance.
After cutting interest rates by a quarter point at its Dec. 17-18 meeting, Fed Chairman Jerome Powell said policymakers may now be “cautious” about further cuts, and noted that uncertainty about the impact of President-elect Donald Trump’s tariff, tax and other proposals has some officials approaching upcoming decisions as if they were “driving on a foggy night or entering a dark room full of furniture.”
Fed member Chris Waller said in new comments today that he thinks more rate cuts will be made this year, but the timing is unclear after several months in which progress in reducing inflation “appeared to have stalled.”
*This is not investment advice.