Fed Minutes Highlight Rate Cut Split: Most Officials Expect Continued Accommodative Stance, but Timing and Size Uncertain

December 31st Minutes from the Federal Open Market Committee’s (FOMC) Dec. 9-10 meeting show most Fed officials saw further rate cuts as appropriate if inflation continued to fall over time—but policymakers clashed over the timing and size of such cuts. The minutes underscored the challenges policymakers confronted in their latest decision, marginally reinforcing market bets the Fed would hold rates steady at its January 2026 meeting. Sharp divisions emerged over whether inflation or unemployment posed a bigger threat to the U.S. economy. Per the minutes: “Some participants who supported or could have backed keeping the federal funds rate target range unchanged at the meeting noted that more data on labor market trends and inflation over the intermeeting period would help assess whether a rate cut was appropriate.” Post-meeting data has done little to narrow the Fed’s internal splits. The November unemployment rate hit 4.6%—the highest since 2021—while consumer price gains came in below forecasts. Both metrics backed calls for rate cuts.