Fed minutes January 2026:

Divided Federal Reserve officials said at the January meeting that further rate cuts should be paused for now but could continue later in the year if inflation cooperates.

While the central bank’s decision to keep its benchmark interest rate steady was met with mostly approval, the path ahead looked less certain, with members conflicted between fighting inflation and supporting the labor market, according to minutes from the Jan. 27-28 meeting released Wednesday.

“In considering the outlook for monetary policy, many participants commented that further downward adjustments to the federal funds rate target range would likely be appropriate if inflation falls in line with their expectations,” the meeting summary said. The statement was included.

But meeting attendees disagreed on where policy should go, with officials arguing over whether to focus on fighting inflation or supporting the labor market.

“Some participants commented that it would probably be appropriate to keep the policy rate steady for a period of time as the Committee carefully considered incoming data, and some of these participants judged that further policy easing may not be necessary until there is a clear sign that progress in disinflation is firmly back on track,” the minutes said. expressions were used.

Moreover, some even embraced the idea that rate hikes might be on the table, calling for the post-meeting statement to more closely reflect “a bipartisan statement regarding the Committee’s future interest rate decisions.”

Such a statement reflected “the possibility that upward adjustments to the federal funds rate target range may be appropriate if inflation remains above target.”

The Fed reduced the benchmark borrowing interest rate by three quarters with consecutive cuts in September, October and December. These moves placed the key rate in the 3.5%-3.75% range.

The meeting was the first for the new voting staff of district presidents; At least two of them, Lorie Logan of Dallas and Beth Hammack of Cleveland, have publicly said they think the Fed should be put on hold indefinitely. Both said they saw inflation as a continuing threat and that it should now be the focus of policy. All 19 governors and regional heads attend the meeting, but only 12 vote.

While the Fed is already ideologically divided, the rift could deepen even further if former Governor Kevin Warsh is confirmed as the next central bank governor. Warsh spoke in favor of lower rates, which is also supported by current Governors Stephen Miran and Christopher Waller. Both Waller and Miran voted against the January decision, opting instead for a quarter-point cut. Current Chairman Jerome Powell’s term ends in May.

The minutes of the meeting do not identify individual participants and use a range of characterizations to describe positions, ranging from “some,” “a few,” “many,” and even include two rare references to “the vast majority.”

Respondents generally expected inflation to decline throughout the year, but “the pace and timing of this decline remained unclear.” They noted the impact the tariffs had on prices and said they expected the impact to diminish as the year goes on.

“However, most participants cautioned that progress towards the Committee’s 2 percent target may be slower and more uneven than generally expected, and judged the risk of inflation to remain persistently above the Committee target to be significant,” the document said. The statement was included.

At the meeting, the interest rate-setting Federal Open Market Committee made changes to some statements in its post-meeting statement. The changes noted that risks to inflation and the labor market have become more balanced and previous concerns about the employment outlook have softened.

Labor force data has been mixed since the meeting; It shows that job creation in the private sector has slowed further, with weak growth coming almost entirely from the healthcare sector. However, the unemployment rate fell to 4.3% in January and non-farm employment growth was stronger than expected.

As for inflation, the Fed’s basic measure of personal consumption expenditures prices is hovering around 3%. But a report last week showed that the consumer price index, excluding food and energy prices, was at its lowest level in nearly five years.

Futures traders are placing their best bets for the next rate cut in June and another in September or October, according to CMEGroup’s FedWatch indicator.