Fed minutes December 2025

WASHINGTON – The Federal Reserve on Tuesday released minutes from a highly controversial meeting earlier this month; That meeting resulted in a vote to lower interest rates again, which appeared to be a closer call than the last vote indicated.

According to the summary presented a day before its announcement as usual due to the New Year’s holiday, officials expressed various opinions at the meeting on December 9-10.

Ultimately, the Federal Open Market Committee approved the quarter-point cut by a 9-3 vote, drawing the most opposition since 2019, when officials debated the need to shore up the labor market against inflation concerns. The move reduced the key fund interest rate to a range of 3.5%-3.75%.

“Most respondents agreed that further downward adjustments to the federal funds rate target range would likely be appropriate if inflation declines as expected over time,” the document said. The statement was included.

However, concerns have also emerged about how aggressive the FOMC should be in the future.

“With respect to the scope and timing of additional adjustments to the federal funds rate target range, some participants suggested that, given their economic outlook, it would likely be appropriate to keep the target range constant for a period of time after the range is lowered at this meeting,” the minutes said. The statement was included.

While authorities expressed their confidence that the economy would continue to grow at a “moderate” pace, they stated that they saw downward risks on employment and upward risks on inflation. The extent of the two dynamics has divided FOMC policymakers, with signs that the vote could go either way, despite the six-vote victory for the cut.

“Several of those who supported lowering the policy rate at this meeting stated that the decision was delicately balanced or that they would support keeping the target range unchanged,” the minutes said.

The vote also comes as the committee’s Summary of Economic Appeals is updated on a quarterly basis, including a closely watched “dot plot” chart of individual officials’ rate expectations.

19 officials at the December meeting (12 votes on interest rates) stated that there was a possibility of another interest rate cut in 2026, followed by another in 2027. This could reduce the fund interest to close to 3%; This level is what authorities consider neutral, as it neither restricts nor pushes economic growth.

The group in favor of keeping the rate steady “expressed concern that progress towards the Committee’s 2 per cent inflation target is stalled in 2025, or that they should have greater confidence that inflation is being sustainably reduced to the Committee’s target.”

Officials have said President Donald Trump’s tariffs have increased inflation, but they also largely agreed that the impact would be temporary and likely fade by 2026.

Economic reports since the vote point to a labor market where hiring is still slow but layoffs are not accelerating. On the price side, inflation is slowly falling, but remains far from the Fed’s 2% target.

At the same time, the overall economy continues to perform well. Gross domestic product rose 4.3% year-on-year in the third quarter, well above forecasts and half a percentage point better than the strong second quarter.

But much of the data carries an important caveat: Reports are still tracking as government agencies collect data from the dark period during the shutdown. Even more recent reports, at least from official sources, are treated with caution due to data gaps.

As a result, markets expect the FOMC to remain steady over the next few meetings, largely as policymakers weigh incoming data. The holiday season has been quiet for Fed official comments, and the few comments that have been made mostly indicate caution heading into the new year.

The committee’s complexion is also about to change, with four new precinct chairs moving into voting roles. They will be Cleveland Mayor Beth Hammack, who has expressed opposition not only to additional cuts but also to previous cuts; Philadelphia President Anna Paulson joined the FOMC doves in voicing concerns about inflation; Expressing concerns about the cut, Dallas President Lorie Logan said; and Minneapolis Mayor Neel Kashkari, who said he would not vote for the October cut.

At the meeting, the committee also voted to continue the bond purchasing program. According to the new structure, the Fed will purchase short-term Treasury bills in order to relieve the pressure on short-term fund markets.

The central bank started the program by buying $40 billion in notes a month and stayed at that level for several months before downshifting. A previous effort to shrink the balance sheet led the Fed to reduce its assets by about $2.3 trillion to the current $6.6 trillion.

The minutes stated that if the purchasing program, known as quantitative easing in the markets, is not restarted, this could lead to “significant declines in reserves” that would fall below the Fed’s “broad” regime for the banking system.