Fed Minutes Show ‘Many’ Saw December Cut as Likely Not Appropriate

Inflation Outlook - The Fed was divided on whether inflation would rise too high [1] - Some members noted inflation had been above target for some time with little sign of returning [2] - Concerns existed regarding persistent core non-housing services inflation and tariff-related inflation in core goods [2] - Businesses planned to raise prices gradually in response to higher tariff-related input costs [2] - Productivity gains might limit the pass-through of tariff costs [3] Economic Activity & Labor Market - The economy was expanding at a moderate pace and the unemployment rate remained low [1] - A few members thought the softening labor market and changes in immigration would keep prices in check [3] - Elevated risks to the labor market were observed, particularly for groups historically more sensitive to economic cycles [3][4] - Divergence existed between subdued job growth and relatively strong GDP [4] - Trade tensions could weigh on economic activity [4] Monetary Policy - Many participants favored lowering the target range for the federal funds rate [4] - Strongly differing views existed regarding the appropriate policy decision at the December meeting [5] - The minutes confirm the Fed was divided and uncertain about the economic outlook [6]