The Federal Reserve released minutes from a divisive December meeting, showing a 9-3 vote to cut interest rates by a quarter percentage point to a range of 3.5%-3.75%. Officials debated over supporting the labor market versus inflation concerns, with some suggesting keeping rates unchanged in the future.

Despite confidence in a “moderate” economic expansion, FOMC policymakers were divided over employment and inflation risks. The vote, supported by a few who felt it was balanced, resulted in an update of individual officials’ rate expectations. The committee predicted another cut in 2026 and one more in 2027.

Officials noted that President Trump’s tariffs were boosting inflation temporarily, but they expected the impact to ease by 2026. Economic reports indicated a slow labor market and easing inflation, with GDP rising 4.3% in the third quarter. However, data collection during the shutdown period has created data gaps.

Markets expect the FOMC to maintain rates as they assess incoming data, with new regional presidents rotating into voting roles. The committee also voted to resume bond-buying, acquiring short-term Treasury bills to stabilize short-term funding markets. Failure to restart the program could lead to significant declines in reserves.

Read more at CNBC: Fed minutes December 2025