Fed minutes suggest there may not be majority support for a December rate cut

By Greg Robb

Many Fed officials want to keep interest rates unchanged for the rest of the year

During his October press conference, Federal Reserve Chair Jerome Powell said a rate cut in December was not a "foregone conclusion."

Federal Reserve officials held "strongly differing views" about whether to cut interest rates in December, with sentiment among them rising that progress on inflation had stalled, according to a summary of the central bank's October meeting, released Wednesday.

Many Fed officials were clear that they wanted the Fed to hold rates steady in December.

These officials said further rate cuts could add to the risk of higher inflation becoming sticky and would be misinterpreted as implying a lack of commitment to the Fed's 2% inflation target.

At the same time, "most" officials suggested that rates would likely move lower over time, but "several" of these officials said they did not necessarily think a December cut was appropriate. Some of these officials said they would wait for the data to decide whether to cut, according to minutes of the meeting.

"In sum, there may not be majority support for a December rate cut," said Val Hartman, U.S. rates strategist at BMO Capital Markets.

Omair Sharif, president of Inflation Insights, noted that Fed officials have fundamentally conflicting views on the economic outlook.

"Right now, officials are not interpreting the data in the same way," he said.

Fed officials in the rate-cut camp viewed cuts as guarding against the possibility of a sharp rise in the unemployment rate, according to the minutes. They argued that inflation from tariffs would likely be limited and allowed for rate cuts to support the labor market.

On the other hand, Fed officials leery of rate cuts pointed out that their business contacts said they were waiting to raise prices until tariff policies were more settled.

Looking at the labor market, some officials noted that the data and alternative data from the private sector during the government shutdown indicated that there hadn't been a sharp deterioration in conditions.

But several other participants said that if the "low-hire, low-fire" labor market weakened further, there could be a sharp rise in the unemployment rate.

The Fed staff forecast that tariff increases would put upward pressure on inflation in 2025 and 2026 and that the unemployment rate would decline next year.

At the October meeting, the Fed voted 10 to 2 to cut its benchmark interest rate by 25 basis points, the second easing in a row.

Stephen Miran, the new Trump appointee to the central bank, dissented in favor of a larger cut, while Kansas City Fed President Jeff Schmid voted to hold rates steady. It was the first two-sided dissent since September 2019.

According to the minutes, several Fed officials did not support the October rate cut. They argued that progress on bringing inflation lower had "stalled."

Fed officials generally judged that the uncertainty about the outlook was elevated. They expressed concern about their ability to assess economic conditions because of the prolonged government shutdown.

The Fed will meet again Dec. 9-10 to decide interest-rate policy.

The government announced that the November unemployment report will be published on Dec. 16, rather than Dec. 5 as originally planned, because of the government shutdown, thereby depriving the Fed of critical information for its upcoming meeting.

After the announcement of the delay in the jobs report and the release of the Fed minutes, Wall Street investors are seeing a much greater probability that the Fed will stand pat at the December meeting.

-Greg Robb

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11-19-25 1610ET