Fed Minutes December 2025

WASHINGTON – The Federal Reserve on Tuesday released the minutes of its highly controversial meeting earlier this month, which ended with a vote in favor of lower interest rates again, this appeared to be an even closer call than the final vote indicated.

Officials expressed various opinions during the Dec. 9-10 meeting, according to the summary provided a day before its usual release due to the New Year holiday.

Ultimately, the Federal Open Market Committee approved a quarter-percentage-point cut by a 9-3 vote, the most dissents since 2019 as officials debated the need to support the labor market in the face of inflation concerns. This decision lowered the key funds rate to a range of 3.5% to 3.75%.

“Most participants believed that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation declined over time as expected,” the document said.

However, this has raised concerns about how aggressive the FOMC will be in the future.

“With respect to the magnitude and timing of additional adjustments to the target range for the federal funds rate, some participants suggested that, given their economic outlook, it would likely be appropriate to keep the target range unchanged for a period of time following a lowering of the range at this meeting,” the minutes state.

Officials expressed confidence that the economy would continue to grow at a “moderate” pace, while seeing downside risks to employment and upside risks to inflation. The magnitude of these two dynamics divided FOMC policymakers, with indications that the vote could have gone either way despite winning six votes in favor of tapering.

“A few of those who favored a policy rate cut at this meeting indicated that the decision was finely balanced or that they might have supported keeping the target range unchanged,” the minutes said.

Shares remained slightly negative after the release. Traders slightly increased their bets on further Fed tapering in April.

The vote was also accompanied by a quarterly update of the committee’s summary of economic projections, including the closely watched “dot plot” of various officials’ rate expectations.

The 19 officials at the December meeting – 12 votes on rates – indicated the likelihood of another cut in 2026, then another in 2027. That would bring the funds rate to almost 3%, a level considered neutral in that it does not restrict or stimulate economic growth.

The faction in favor of keeping the rate stable “expressed concern that progress toward the Committee’s 2 percent inflation target may have stalled in 2025 or indicated that it should have greater confidence that inflation was being brought sustainably back to the Committee’s target.”

Officials said the president Donald TrumpThe tariffs were boosting inflation, but there was also broad agreement that the impact would be temporary and likely ease through 2026.

Since the vote, economic reports have highlighted a job market where hiring is still slow but layoffs have not accelerated. On the price side, inflation is slowing slowly but remains far from the Fed’s 2% target.

At the same time, the economy as a whole continues to do well. Gross domestic product soared in the third quarter, growing at an annualized rate of 4.3%, well above estimates and half a percentage point higher than in the strong second quarter.

However, most of the data comes with an important caveat: Reporting is still lagging as government agencies piece together data from the dark days of the government shutdown. Even the most recent reports, at least those from official sources, are evaluated with caution due to data gaps.

As a result, markets widely expect the FOMC to stay put over the next few meetings as policymakers evaluate upcoming data. The holiday season was quiet for official Fed comments and the few comments released mostly reflect caution heading into the new year.

The face of the committee is also set to change, with four new regional chairs taking turns in voting roles. They will include Cleveland President Beth Hammack, who has expressed opposition not only to the additional cuts but also to previous ones; Philadelphia President Anna Paulson, who joined FOMC doves in expressing concerns about inflation; Dallas President Lorie Logan, who expressed concerns about the cuts; and Minneapolis President Neel Kashkari, who said he would not have voted for the October cuts.

Also at the meeting, the committee voted to resume its bond buyback program. Under the new setup, the Fed will acquire short-term Treasury bonds in an effort to ease pressures in short-term funding markets.

The central bank launched this program by purchasing $40 billion worth of bonds per month, staying around that level for several months before downgrading. As part of an earlier effort to shrink the balance sheet, the Fed reduced its holdings by about $2.3 trillion, bringing them to the current $6.6 trillion.

The minutes note that unless the purchasing program, known in markets as quantitative easing, is restarted, it could result in a “significant decline in reserves” that would fall short of the Fed’s “ample” regime for the banking system.

Correction: The vote is accompanied by a quarterly update of the committee’s summary of economic projections. An earlier version incorrectly stated the name of the forecast.