Fed Minutes Show Deep Divide on December Rate Cut

​A Central Bank Split Down the Middle
The latest Federal Reserve minutes reveal what markets have suspected for weeks: officials are nowhere close to agreeing on whether to cut rates again in December. Some policymakers argue the economy is soft enough to warrant another move toward neutral. Others insist inflation progress is too fragile to justify more easing.

The tension is sharper than usual — not just a difference in emphasis, but fundamentally opposing views on what the economy needs next.

“Most” Want to Cut, but “Several” Say Not So Fast
A majority of Fed officials favored another 25-basis-point cut, saying policy is still restrictive and risks weighing too heavily on growth. But a sizable group pushed back, warning that further easing could send the wrong message — that the Fed is stepping away from its inflation fight too soon.

The minutes highlighted disagreement over how restrictive current rates actually are. Some believe policy is still biting into demand. Others argue financial conditions remain too loose for comfort.

Inflation Still Too Sticky for Some
Officials who oppose another cut say they’re unsettled by stubbornly high core inflation, especially in non-housing services — the category the Fed watches most closely. Although cooling rents are helping, rising goods prices driven by tariffs and shifting supply chains are keeping overall inflation elevated.

A few policymakers expressed hope that higher productivity, helped in part by AI, could offset some inflation pressures. But many remain unconvinced that productivity gains are arriving fast enough to change the immediate outlook.

Labor Market Risks Cut Both Ways
Some officials fear tightness in the job market could reignite inflation. Others see the opposite risk: a labor market quietly weakening beneath the surface. Businesses are hiring more cautiously, job turnover is slowing, and companies are reluctant to expand headcount.
Those changes may not show up in headline unemployment yet, but several officials warned that if demand for workers drops further, joblessness could jump quickly.

Powell’s Message: Don’t Assume Anything
Chair Jerome Powell made it clear at the last press conference that a December cut is “far from a foregone conclusion,” and the minutes confirm it. With officials divided and core inflation still elevated, the Fed is preparing for one of its most contested meetings of the year.

​The only certainty heading into December is uncertainty — and markets will have to navigate a central bank that is no longer moving in clear unison.