FOMC Minutes December 2025 Reveal Split on Cuts
FOMC minutes December 2025 show policymakers divided over further rate cuts, leaving markets focused on incoming inflation readings to set easing timing.
KEY TAKEAWAYS
- Committee approved a 25 bp cut to a 3.5%-3.75% federal-funds range.
- Most participants judged further rate reductions appropriate if inflation continued toward 2 percent.
- Some participants urged keeping the policy rate steady for some time to assess prior cuts' effects.
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The Federal Reserve's FOMC minutes December 2025, released Dec. 30, show officials divided after the Dec. 9-10 meeting’s 25 basis-point rate cut. Most supported additional easing if inflation moderates, while a minority urged a pause to assess the impact of prior cuts.
Committee Divided on Further Rate Cuts
At the December meeting, the Federal Open Market Committee approved a 25 basis-point reduction, lowering the federal-funds target range to 3.5%–3.75%. The minutes said most participants judged that further policy rate reductions would be appropriate if inflation continued to decline toward the Committee’s 2 percent objective over time. This language made additional easing explicitly conditional on incoming inflation data.
Some participants recommended holding the policy rate steady for some time to better assess the effects of the three rate cuts delivered in 2025. They argued that a pause would provide greater confidence in how prior easing influenced the economy before moving again.
A few participants expressed less confidence that inflation was moving durably toward the 2 percent target, citing risks that it could become more entrenched. This concern supported calls to maintain the current policy rate.
Together, the minutes reveal a split between those favoring conditional easing and those urging caution. The timing and scale of further cuts will depend on inflation trends rather than a preset schedule. Markets and policymakers will watch incoming data closely to determine whether inflation confirms the majority’s expectation of moderation or reinforces the case for restraint.
"A few participants... expressed less confidence that inflation was durably moving to 2 percent, citing risks of it becoming more entrenched," the minutes said.
