WASHINGTON (AP) 鈥� Many Federal Reserve officials want to see inflation fall further before they would support additional interest rate cuts this year, particularly if the job market continues to stabilize, minutes of last month’s meeting show.
The 鈥渧ast majority鈥� of the 19 participants on the Fed’s rate-setting committee said that there were signs the job market has stabilized, after the unemployment rate rose in late 2025, the minutes said. And most of the officials agreed that the Fed’s key rate is close to a level that neither stimulates nor restrains the economy. The minutes were released Wednesday, three weeks after the central bank’s .
Fed officials at that meeting at about 3.6%, after cutting it three times late last year. Two officials 鈥� Fed governors Stephen Miran and Christopher Waller 鈥� voted instead to cut another quarter-point.
The minutes underscored the deeply divided nature of the committee, with several camps emerging: 鈥淪everal鈥� officials said additional cuts will 鈥渓ikely be appropriate鈥� if inflation continues to decline. But 鈥渟ome” officials favored keeping rates unchanged 鈥渇or some time,” suggesting a longer pause. And several other officials said they could have supported language in the statement issued after the meeting that would signal the next move by the Fed could be either a cut or a rate hike, if inflation remains above their 2% target.
The support for signaling an openness to a potential rate hike appears to be a significant shift from previous meetings. Chair Jerome Powell said after meetings last year that the idea of a rate hike wasn’t on the table.
Powell signaled after January’s meeting that the Fed could wait for a few months before cutting rates again. He said at a news conference that the economy and hiring had improved since the central bank had previously met in December, and added that the Fed was 鈥渨ell positioned鈥� to evaluate how the economy evolves in the coming months before making any further moves.
The decision to keep rates unchanged defied a stream of demands from for the Fed to reduce its key rate to as low as 1%, a level few economists endorse. When the Fed cuts its key rate, it can over time lower borrowing costs for mortgages, auto loans, and business loans, though those rates are also influenced by financial markets.
The minutes said that the 鈥渧ast majority鈥� of the 19-person committee agreed that the risks of job losses and a worsening labor market had diminished, likely a key reason that they voted to keep rates unchanged. The Fed typically cuts rates to boost spending, growth, and hiring.
Figures released last week suggest the Fed will be unlikely to cut anytime soon. Inflation remains elevated, according to the Fed鈥檚 preferred measure, and January鈥檚 jobs report showed that hiring picked up last month. Those trends support those Fed officials who argue that the economy doesn鈥檛 need further rate cuts.
Consumer prices grew 2.4% in January compared with a year earlier, the government , not too far from the Fed鈥檚 2% target.
But the Fed focuses on a different measure of inflation, which is running higher. When the latest figure is released Friday, it is expected to have increased roughly 3% from a year earlier. The Fed鈥檚 preferred measure puts much less weight on housing and apartment rental costs, which have cooled considerably, and as a result it is running above the better-known consumer price index.
Also last week, the government said that hiring improved in January, with employers , the biggest gain in just over a year, while the unemployment rate slipped to a low 4.3%, down from 4.4%.
Fed Governor Michael Barr on Tuesday pointed to the jobs report as evidence that the labor market is 鈥渟tabilizing,鈥� while inflation remains above 2%.
鈥淏ased on current conditions and the data in hand, it will likely be appropriate to hold rates steady for some time,鈥� Barr said.
Separately, Austan Goolsbee, the president of the Federal Reserve Bank of Chicago, told CNBC Tuesday that the Fed could reduce rates 鈥渟everal more鈥� times this year, if there is evidence that inflation was moving closer to 2%.
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