Minutes of latest Federal Reserve meeting reveal deep divide over interest rates

"The US Federal Reserve agreed to cut interest rates at its December meeting only after a deeply nuanced debate about the risks facing the US economy right now, according to minutes of the latest two-day session. Even some of those who supported the rate cut acknowledged the decision was finely balanced or that they could have supported keeping the target range unchanged, given the different risks facing the US economy, according to the minutes released on Tuesday."

"In economic projections released after the 9-10 December meeting, six officials outright opposed a cut and two of that group dissented as voting members of the Federal Open Market Committee. Most participants ultimately supported a cut, with some arguing that it was an appropriate forward-looking strategy that would help stabilize the labor market after a recent slowdown in job creation."

"Others, however, expressed concern that progress towards the committee's 2% inflation objective had stalled. Some participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for some time after a lowering of the range at this meeting, the minutes said of a debate that saw officials dissent both in favor of tighter and looser monetary policy, an unusual outcome for the central bank that has now happened at two consecutive meetings."

The Federal Reserve approved a quarter-point rate cut in December, lowering the policy range to 3.5% to 3.75%. Officials were deeply divided, with six opposing a cut and two dissenting as voting members of the FOMC, while most ultimately supported easing. Supporters argued the move would be a forward-looking step to help stabilize the labor market after slower job growth, while others warned that progress toward the 2% inflation goal had stalled. Some participants said that their outlooks favored keeping the target range unchanged for a time after the reduction. New projections show only one rate cut expected next year.

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