Fed minutes reveal caution among some officials over further rate cuts

Diverging views within the Federal Open Market Committee

The minutes, released Tuesday from the December 9-10 FOMC meeting, showed that most officials backed lowering the federal funds rate by 25 basis points to a range of 3.50-3.75%. However, a contingent preferred to hold rates steady, indicating internal debate over the appropriate restrictiveness of monetary policy.

Rationale for the cut versus arguments for pause

Officials who supported the reduction cited increased downside risks to employment and diminished upside risks to inflation as key justifications. They argued the move would align with expected future inflation declines and support economic activity in 2026. Conversely, those favoring a pause expressed concern that progress toward the Fed's 2% inflation target had stalled and required greater confidence in a sustainable downward trend.

Implications for future policy path

The discussion suggests the Fed may enter a period of holding rates steady to assess the impact of previous cuts and incoming economic data. This cautious approach by the world's most influential central bank has significant implications for global financial markets and capital flows, affecting economies worldwide, including emerging markets like Türkiye.