Minutes from the Federal Reserve’s January meeting show that policymakers remain concerned about persistent inflation and may raise interest rates if price growth continues above target levels.
The Federal Open Market Committee (FOMC) voted to keep the benchmark federal funds rate in a range of 3.5% to 3.75%.
Several members indicated support for a dual-path approach to future rate decisions, signaling that the Fed could increase rates if inflation remains above the 2% target. The minutes also noted that most participants believe the risk of a slowdown in employment has diminished in recent months, while the threat of sustained inflation persists.
Two FOMC members, Christopher Waller and Steven Miran, dissented, favoring a quarter-point rate cut. Other officials signaled a reduced openness to further rate reductions in the near term, emphasizing that loosening policy while inflation is high could be misinterpreted as weakening commitment to the inflation target.
Recent U.S. economic data shows continued growth, moderating inflation, and stable labor market conditions. Employers added 130,000 jobs in January, while the unemployment rate unexpectedly fell to 4.3%, highlighting resilience in the labor market. Consumer prices rose modestly, with energy costs contributing to a slight increase, and the core Consumer Price Index, which excludes food and energy, remained steady.
The minutes also confirmed that Jerome Powell was reappointed as Chair of the FOMC until 2027, with other committee positions filled until successors are chosen at the first regular meeting of 2027.
While some Fed officials see potential for future rate cuts if inflation slows as expected, most expect the pace of decline to be gradual. Traders have scaled back expectations for an early rate cut, though futures markets still price in a possible reduction by June.
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