December Rate Cut Uncertain as Fed Divisions Surface in Meeting Minutes

Policymakers clash over a softening labor market and stubborn inflation

The Federal Reserve’s decision to trim rates last month proved far more contentious than the public narrative suggested. The recently released minutes reveal a board split between those who see a weakening job market as a signal to ease monetary policy and those who remain wary of lingering price pressures.

Weaker employment data sparked vigorous debate among the governors. Some argued that the slowdown in hiring warranted a more aggressive stance to support growth, while others warned that premature easing could reignite inflationary forces that have yet to subside.

“We cannot ignore the signs that the labor market is losing momentum,” one official wrote, “but we must also remain vigilant that inflation does not regain its upward trajectory.” This tension underscores the “fault lines” within the Fed, as members weigh the risk of stalling the economy against the danger of letting inflation become entrenched.

Given the divergent views, the prospect of a December rate cut remains doubtful. The board’s next steps will likely hinge on fresh data, especially regarding wage growth and consumer price trends, before any consensus on further monetary easing can be reached.