Fed meeting minutes: Policymakers support further rate cuts

The minutes of the Federal Reserve meeting held on Dec. 9-10 revealed that most monetary policymakers view further interest rate cuts as an appropriate step if inflation declines over time as expected.

During the meeting, some members viewed the decision to cut interest rates by 25 basis points as “finely balanced”, and few members would have supported keeping the target range unchanged.

The meeting highlighted that economic activity is expanding at a moderate pace, while employment growth is slowing, and that the impact of tariffs on inflation is gradually fading, however, some cost pressures remain.

Forecasts point to moderate economic growth in 2025 and a relative acceleration in 2026. This growth is supported by investment and the technology sector.

Meanwhile the minutes noted that capital markets experienced limited volatility and that monetary policy decisions will remain flexible and data-dependent, particularly with regard to labor market developments.

Members indicated that there is a focus on anchoring long-term inflation expectations to ensure a return to the 2% target.

They also discussed the need to purchase short-term Treasury securities, the discussions aimed to maintain adequate levels of reserves. This was accompanied by a focus on managing market volatility and liquidity in repo markets.

In light of the current economic outlook, it may be appropriate to keep interest rates on hold for a period of time, the meeting minutes, indicated.

Nine members voted in favor of a 25-basis-point rate cut, one member called for a 50-basis-point cut, while two supported holding rates steady.