Fed officials divided over December rate cut, meeting minutes show

• Three officials dissented from the December decision: Stephen Miran wanted a larger 50-basis-point cut, while Austan Goolsbee and Jeffrey Schmid voted to keep rates unchanged
• The FOMC cut rates to a target range of 3.5% to 3.75%, with most participants expecting further cuts if inflation continues declining toward the Fed's 2% goal
• Policymakers agreed that inflation remains 'somewhat elevated' while labor market conditions have continued to soften, highlighting competing policy concerns

The Federal Reserve's December meeting minutes revealed significant division among policymakers regarding the pace of future rate cuts, following a 25-basis-point reduction that brought the federal funds rate to 3.5%-3.75%.

While most FOMC members supported continued gradual rate cuts contingent on inflation declining toward the 2% target, some officials advocated pausing to assess the cumulative impact of previous policy adjustments. The split reflects competing concerns between inflation control and employment risks.

Three officials dissented from the December decision, marking an unusual level of disagreement. Stephen Miran pushed for a more aggressive 50-basis-point cut, while Austan Goolsbee and Jeffrey Schmid voted to maintain current rates, citing insufficient progress on inflation reduction.

Key concerns highlighted include:

• Inflation remains "somewhat elevated" above the 2% target
• Labor market conditions continue softening, raising downside employment risks
• Uncertainty about the lagged effects of previous rate cuts

The minutes emphasized that monetary policy remains data-dependent rather than following a predetermined path. Officials agreed future decisions would hinge on incoming economic data and evolving risk assessments.

Market implications suggest continued uncertainty about the Fed's trajectory in 2025. The internal divisions indicate potential volatility in rate expectations, particularly as markets assess whether the Fed will prioritize fighting inflation or supporting employment. The lack of consensus may increase market sensitivity to upcoming inflation reports and employment data.

The next FOMC meeting is scheduled for January 27-28, where these divisions will likely resurface as officials reassess economic conditions and policy direction for early 2025.