Fed Minutes Signal Caution on Rate Cuts

Federal Reserve officials signaled caution on further interest rate cuts during their January meeting, with several policymakers expressing openness to potential rate increases if inflation fails to ease toward the central bank's 2 percent target, according to minutes released on Wednesday.

The Federal Open Market Committee, the Fed's rate-setting body, voted 10-2 on January 27-28 to maintain the benchmark federal funds rate in a target range of 3.5 percent to 3.75 percent. This decision followed three quarter-point reductions late in 2025 that lowered the rate from 4.5 percent, aimed at supporting a weakening labor market at the time. Governors Christopher Waller and Stephen Miran dissented, favoring an additional quarter-point cut to address lingering employment risks.

The minutes highlighted divisions among the 19 participants. A majority viewed the current rate as close to a neutral stance that neither stimulates nor restrains economic growth. Most agreed that downside risks to employment had moderated since late last year, when the unemployment rate had risen. However, concerns persisted about inflation's path. Several officials noted that progress toward the 2 percent goal...