WASHINGTON— Divisions inside the Federal Reserve ran deeper than the final vote suggests when policymakers cut interest rates earlier in December, according to FOMC meeting minutes released this week.
The Fed voted 9–3 at its Dec. 9–10 meeting to reduce its benchmark rate by a quarter point—its third cut of the year—bringing the rate to about 3.6%, the lowest level in nearly three years, the Associated Press reported. Such a degree of dissent is uncommon for a committee that typically seeks consensus.
Two policymakers voted to hold rates steady, while a third pushed for a larger, half-point reduction, highlighting sharp disagreement over the central bank’s next steps, the AP said.
According to the minutes, the debate centers on what poses the greater risk to the economy: a softening labor market or inflation that remains stubbornly above the Fed’s target. Officials concerned about weakening hiring favor deeper rate cuts, while those focused on inflation argue for keeping borrowing costs higher—or even raising them, the AP reported.
The minutes also show that some officials who ultimately supported the quarter-point cut did so reluctantly, preferring to wait for more economic data before committing to additional moves. Key indicators on jobs, inflation, and economic growth were delayed by the recent six-week government shutdown, leaving policymakers to rely on outdated information at the time of the meeting, according to the Associated Press.
While the minutes do not attribute comments to individual officials, voting records show that Kansas City Fed President Jeffrey Schmid and Chicago Fed President Austan Goolsbee dissented in favor of keeping rates unchanged. The third dissent came from Fed Governor Stephen Miran, a Trump appointee confirmed in September, who favored a larger rate cut, the AP reported.
Only 12 of the Fed’s 19 policymakers cast votes on rate decisions, though all participate in the discussions, the Associated Press noted.