WASHINGTON— Federal Reserve officials showed little inclination to cut interest rates at their January meeting, signaling they want clearer evidence that inflation is easing before considering further reductions, according to minutes released earlier this week.
As the CU Daily reported earlier, policymakers voted 10-2 at their Jan. 27-28 meeting to hold the central bank’s benchmark rate in a range of 3.5% to 3.75%, marking the first pause since July. While two officials favored a cut, others indicated they would have supported language emphasizing that future moves could go in either direction, including the possibility of rate increases if inflation remains elevated, the minutes indicate.
‘Two-Sided Description’
“Several participants indicated that they would have supported a two-sided description” of future decisions, reflecting the possibility that upward rate adjustments “could be appropriate if inflation remains at above-target levels,” the minutes said.
As the Wall Street Journal noted in its analysis, Fed Chair Jerome Powell said after the meeting that officials were “well positioned” and gave no indication of when another cut might occur, underscoring a lack of urgency following three quarter-point reductions between September and December 2025.
The minutes also revealed a growing concern among policymakers that inflation could remain stubborn. As the Journal further reported, officials warned that progress toward the Fed’s 2% target “might be slower and more uneven than generally expected,” and described the risk of persistently above-target inflation as “meaningful.”
Divisions Apparent
The discussion highlighted divisions within the committee. Some officials said they would support additional cuts if inflation continued to decline as expected, while a somewhat larger group said they want clearer evidence that disinflation is “firmly back on track” before easing policy further, the Journal said.
The minutes suggested officials are less worried about labor-market weakness than earlier and more focused on the risk that inflation could linger above target. As a result, economists widely expect the Fed to keep rates unchanged at its next meeting.
