Fed Minutes Reveal Split Over December Rate Cut

Fed minutes released Nov. 19, 2025, show the Federal Open Market Committee is sharply divided on whether to cut interest rates again at its Dec. 9–10 meeting, with officials weighing persistent inflation against signs of a weakening labor market.

Divergence Over December Rate Decision

The minutes from the Oct. 29 meeting show the committee lowered the federal-funds target by 25 basis points to a 3.75%–4.00% range, setting the stage for debate over further easing. Most participants judged that additional rate cuts would likely be appropriate over time, but several did not see another reduction as necessary at the December meeting.

The record reveals clear voting splits: Governor Stephen Miran dissented, favoring a 50-basis-point cut, while Kansas City Fed CEO Jeffrey Schmid preferred holding rates steady. Many participants suggested maintaining the current target range through the rest of 2025.

This division reflects uncertainty about the near-term policy path, with members broadly accepting easing as a possible medium-term approach but differing on its timing.

Inflation and Labor Market Weakness

The FOMC’s 2025 policy framework, reaffirmed in a Nov. 19 update from the Richmond Fed, reiterates a 2% inflation target and endorses a flexible approach to deviations. Officials cited this framework to explain why judgment should guide near-term decisions rather than a fixed rule.

Some members assessed underlying inflation as close to the target and described inflation expectations as well anchored. Others pointed to persistent inflation above target, creating contrasting views on how much easing the economy can absorb without reigniting price pressures.

Labor market weakness, including declines in job creation and rising layoff announcements, was the most cited reason among officials advocating further cuts. Governor Christopher J. Waller publicly supported another 25-basis-point reduction at the December meeting, citing weak hiring and anchored inflation expectations.

Officials noted that the October–November government shutdown disrupted official economic data, complicating their assessment of incoming labor and inflation reports. These data gaps increased uncertainty about the committee’s path.

The minutes and officials’ remarks indicate that the December decision depends on forthcoming economic readings, leaving the near-term policy outlook uncertain. The documents focused exclusively on the policy debate and economic data, with no new regulatory actions reported.