Highlights
The minutes of the December 9-10 FOMC meeting reflect divisions among committee participants as to the proper path of monetary policy to achieve the dual mandate for maximum employment and price stability. It also reflects that the FOMC did not have its usual complement of US economic data reports on which to base its decision, although available information was sufficient. The minutes show the FOMC position three weeks ago. The next meeting is January 27-28, 2026. The FOMC will have all the most current data by that time.
On the side of price stability, there was agreement that overall inflation had moved up through September since earlier in the year and remained somewhat above the Committee's 2 percent longer-run goal, but more recent inflation data produced by the government were unavailable, the minutes said. It was observed that goods inflation saw boosted prices from higher tariffs. Price inflation for housing services was moderating. Overall, A majority of participants remarked that overall inflation had been above target for some time and had not moved closer to the 2 percent objective over the past year.
Although many participants anticipated that inflation would ease once the effects of tariffs had passed through the economy, how long that process would take was uncertainty. The minutes said, Participants generally judged that the risks to inflation remained tilted to the upside, although several participants commented that they considered these upside risks to have decreased. Some participants highlighted the risk that elevated inflation might prove more persistent than expected.
FOMC participants were not immediate concerned about inflation expectations which remained stable. However, some participants noted concerns that a more prolonged period of above-target inflation could risk an increase in longer-run expectations.
On the side of maximum employment, there was agreement that labor market conditions had continued to soften and that the unemployment rate had edged up. Hiring was called subdued although layoff activity was more stable. The minutes said, Participants generally viewed the low dynamism in the labor market as reflecting both lower labor demand amid economic uncertainty or efforts by businesses to contain costs and decreased labor supply associated with lower immigration, the aging of the population, or reduced labor force participation.
Risks to the still quite uncertain labor market remained tilted to the downside although participants anticipated that the labor market likely would stabilize next year.
With the economy expanding at a moderate pace, the labor market weaker, and inflation still somewhat elevated, the committee determined at a 25-basis point rate cut would address the increased downside risks to employment at a time when inflation was expected to ease further in coming months. A majority said that the cut would move the policy rate toward a more neutral stance. Those who wanted no change in rates wanted more confidence that inflation was being brought down sustainably to the 2 percent objective. There was caution among Some participants who favored or could have supported keeping the target range unchanged suggested that the arrival of a considerable amount of labor market and inflation data over the coming intermeeting period would be helpful in making judgments on whether a rate reduction was warranted. A few participants judged that lowering the federal funds target range at this meeting was not justified because data received over the intermeeting period did not suggest any significant further weakening in the labor market.
The minutes also show a committee sorting through the implications of managing the Fed's holdings of US treasuries and mortgage-backed securities once the program to reduce its balance sheet ended, and making technical adjustments to ensure reserves remained ample. Adjustments to balance sheet policy including the decision to buy bills are not monetary policy decisions. Rather, these are intended to ensure the smooth functioning of markets and maintain the fed funds rate in its target range.
On the side of price stability, there was agreement that overall inflation had moved up through September since earlier in the year and remained somewhat above the Committee's 2 percent longer-run goal, but more recent inflation data produced by the government were unavailable, the minutes said. It was observed that goods inflation saw boosted prices from higher tariffs. Price inflation for housing services was moderating. Overall, A majority of participants remarked that overall inflation had been above target for some time and had not moved closer to the 2 percent objective over the past year.
Although many participants anticipated that inflation would ease once the effects of tariffs had passed through the economy, how long that process would take was uncertainty. The minutes said, Participants generally judged that the risks to inflation remained tilted to the upside, although several participants commented that they considered these upside risks to have decreased. Some participants highlighted the risk that elevated inflation might prove more persistent than expected.
FOMC participants were not immediate concerned about inflation expectations which remained stable. However, some participants noted concerns that a more prolonged period of above-target inflation could risk an increase in longer-run expectations.
On the side of maximum employment, there was agreement that labor market conditions had continued to soften and that the unemployment rate had edged up. Hiring was called subdued although layoff activity was more stable. The minutes said, Participants generally viewed the low dynamism in the labor market as reflecting both lower labor demand amid economic uncertainty or efforts by businesses to contain costs and decreased labor supply associated with lower immigration, the aging of the population, or reduced labor force participation.
Risks to the still quite uncertain labor market remained tilted to the downside although participants anticipated that the labor market likely would stabilize next year.
With the economy expanding at a moderate pace, the labor market weaker, and inflation still somewhat elevated, the committee determined at a 25-basis point rate cut would address the increased downside risks to employment at a time when inflation was expected to ease further in coming months. A majority said that the cut would move the policy rate toward a more neutral stance. Those who wanted no change in rates wanted more confidence that inflation was being brought down sustainably to the 2 percent objective. There was caution among Some participants who favored or could have supported keeping the target range unchanged suggested that the arrival of a considerable amount of labor market and inflation data over the coming intermeeting period would be helpful in making judgments on whether a rate reduction was warranted. A few participants judged that lowering the federal funds target range at this meeting was not justified because data received over the intermeeting period did not suggest any significant further weakening in the labor market.
The minutes also show a committee sorting through the implications of managing the Fed's holdings of US treasuries and mortgage-backed securities once the program to reduce its balance sheet ended, and making technical adjustments to ensure reserves remained ample. Adjustments to balance sheet policy including the decision to buy bills are not monetary policy decisions. Rather, these are intended to ensure the smooth functioning of markets and maintain the fed funds rate in its target range.
Definition
Detailing the issues of debate and consensus among policymakers, the Federal Open Market Committee issues minutes of its latest meeting three weeks after the meeting.
Description
The FOMC has changed dramatically in the transparency of its operations. It now discloses policy changes at the end of each meeting. Historically, the Fed used to keep investors guessing about policy changes and Fed officials did not appear on the speaking circuit as frequently as they do now.
The Fed's minutes are a market mover as investors and analysts parse each word looking for clues to policy. The minutes include the complete economic analysis compiled by Fed officials and opinions at odds with the consensus.
Investors who want a more detailed description of Fed opinions will generally read the minutes closely. Fed officials also make numerous speeches, which give their views to the public at large.
The Fed's minutes are a market mover as investors and analysts parse each word looking for clues to policy. The minutes include the complete economic analysis compiled by Fed officials and opinions at odds with the consensus.
Investors who want a more detailed description of Fed opinions will generally read the minutes closely. Fed officials also make numerous speeches, which give their views to the public at large.
