The minutes of the December meeting showed disagreement over the decision to cut interest rates, with the 0.25% rate cut being a “critical call”.

Fed officials at their Dec. 17-18 meeting expected to slow the pace of rate cuts this year in the face of persistently high inflation and the threat of widespread tariffs and other potential policy changes.

Minutes of the meeting, released on Wednesday after a typical three-week lag, also showed clear divisions among the Fed’s 19 policymakers. The minutes of the meeting stated that some people expressed support for keeping the central bank’s key interest rate unchanged. Most officials said the decision to cut rates was a close call.

Ultimately, the Fed chose Reduce key interest rates It fell a quarter of a percentage point to about 4.3%. Officials including Cleveland Fed President Beth Hammack opposed keeping rates unchanged.

Still, there is widespread agreement that it is time to take a more prudent approach to the key rate after three consecutive meetings to cut rates.

Smaller rate cuts could mean borrowing costs for consumers and businesses, including for homes, cars and credit cards, will remain elevated this year.

Policymakers said the Fed “is at or near the point where it is appropriate to slow down the pace of policy easing,” the minutes said. In forecasts released after the meeting, Fed officials said they expected only two rate cuts next year, down from four previously forecast.

Trump tariffs

The minutes also showed that “nearly all” Fed policymakers believed there was a greater risk than before that inflation could continue to run higher than expected, in part because inflation has persisted in recent data and “potential changes in trade and immigration may The impact of “policy”.

Fed economists at the December meeting viewed the economy’s future path as particularly uncertain, in part due to “potential changes in trade, immigration, fiscal and regulatory policies” under President-elect Donald Trump’s administration, staff said. It is difficult to assess these changes in terms of how they will affect the economy. As a result, their presentations to policymakers included several different scenarios for the future economic path.

The staff expects inflation this year to be about the same as in 2024, as they expect Trump’s proposed tariffs to keep inflation elevated.

Stocks tumbled after Federal Reserve officials last month downgraded their outlook for rate cuts. Federal Reserve Chairman Powell said at the press conference after the meeting that the decision to cut interest rates was “a critical moment.”

Powell also said recent signs of stubborn inflation have led many Fed officials to lower their expectations for rate cuts. Inflation rose to 2.4% in November from a year earlier, according to the Fed’s preferred measure, above the Fed’s 2% target. Excluding the volatile food and energy categories, the figure was 2.8%.

Additionally, the minutes said some officials had begun considering the potential impact of Trump’s proposals, such as widespread tariffs, on the economy and inflation next year.

Economists at Goldman Sachs, for example, estimate that Trump’s tariff proposals could increase inflation by nearly half a percentage point later this year.

Earlier on Wednesday, Fed Governor Christopher Waller said he still supports cutting interest rates this year, in part because he expects inflation to fall steadily toward the Fed’s target. He also said he did not expect the tariffs to increase inflation or change his preference for lower borrowing costs.

During the question-and-answer session, Waller also said he didn’t think Trump would ultimately implement the widespread tariffs he promised during his campaign.