Division at the central bank grows with decisionmakers split on the path ahead
A majority of Federal Reserve decisionmakers still favor bringing interest rates lower if inflation continues to moderate, but the minutes of the central bank’s latest meeting show hikes are still in play this year if price growth accelerates.
The central bank opted to hold rates steady in its last decision, voting 10-2 against a change in January as Federal Open Market Committee (FOMC) members took a wait-and-see approach to the economy’s performance in early 2026.
But opinion on the likely next move is split between hawks who favor holding rates steady – or even hiking down the line – and more dovish representatives who believe the labor market will show further strain if rates don’t move lower.
Several decisionmakers, the minutes showed, “commented that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation were to decline in line with their expectations.”
Others supported a prolonged hold – “and a number of these participants judged that additional policy easing may not be warranted until there was clear indication that the progress of disinflation was firmly back on track.”
That impasse could deepen tension at a Fed that’s frequently found itself at loggerheads with the Trump administration over the past year.
The president has called on multiple occasions for lower rates, personally attacking Fed chair Jerome Powell and attempting to fire FOMC member Lisa Cook over allegations of mortgage fraud.
Trump has named Kevin Warsh as his choice to succeed Powell when the current chair’s term expires in May. That appointment, subject to congressional approval, would see the installation of a chair widely viewed as more amenable to Trump’s rate outlook than Powell has been.
It’s unclear from the latest meeting summary – released Wednesday – which FOMC members are more open to the possibility of rate cuts, with those minutes not identifying individuals in support of or against the idea.
Still, governors Stephen Miran and Christopher Waller have frequently called for cuts in recent months, and Miran has consistently argued for oversized reductions of more than 25 basis points at a time.
The US’s latest inflation reading came in at 2.4% last month, a slower pace than December. Cooler inflation might strengthen the case for Fed cuts – but a majority of central bank decisionmakers, for now, seem to view such a move as unlikely anytime soon.
“Most participants… cautioned that progress toward the Committee’s 2% objective might be slower and more uneven than generally expected,” the meeting summary said, “and judged that the risk of inflation running persistently above the Committee’s objective was meaningful.”
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