Some Fed officials had doubts about interest rate cut, minutes reveal

Some Federal Reserve officials who supported cutting a key interest rate in December could have instead backed keeping the rate unchanged, minutes released this week show, underscoring the divisions and uncertainty permeating the central bank.

- By CHRISTOPHER RUGABER

At their Dec. 9 10 meeting, Fed officials agreed to cut their key interest rate by a quarter point for the third time in 2025, to about 3.6%, the lowest in nearly three years. Yet the move was approved by a 9-3 vote, an unusual level of dissent for a committee that typically works by consensus. Two Fed officials supported keeping the rate unchanged, while one wanted a larger, half-point reduction.

The minutes underscored the deep split on the 19-member policymaking committee over what constitutes the biggest threat to the economy: weak hiring or stubbornly elevated inflation. If a sluggish job market is the biggest threat, then the Fed would typically cut rates more. But if still-high inflation is the bigger problem, then the Fed would keep rates elevated, or even raise them. Just 12 of the 19 members vote on rate decisions, though all participate in discussions.