Fed Minutes Reveal Officials See 'High Degree Of Uncertainty' Requiring 'A Careful Approach' On Rate Cuts

Minutes from the January Federal Open Market Committee (FOMC) meeting released Wednesday showed many of the Federal Reserve's policymakers stressed the need for additional evidence that inflation was cooling before any further interest rate cuts could be considered. 

The Details: The January meeting's minutes revealed that all of the Fed’s policymakers supported keeping its key rate steady at the 4.25% to 4.5% range. Officials noted a "high degree of uncertainty" that requires the Fed to "take a careful approach" in considering any further changes to its key interest rate.

Several Fed meeting participants highlighted President Donald Trump's proposed tariffs and immigration policies, strong household spending, and geopolitical risks as factors that led to the large degree of uncertainty surrounding the rate of inflation in the near term. 

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However, there was some back-and-forth between policymakers, with some suggesting the Committee could keep the policy rate at a restrictive level if inflation remained elevated and others noting policy could be eased more quickly if economic conditions warranted or inflation returned to 2%. 

Markets React: Market-implied probabilities via CME FedWatch were unchanged following the release of the FOMC minutes, assigning a 97.5% chance of the Fed holding rates unchanged at its March meeting, and the remaining 2.5% odds pointing to a cut in interest rates.

Major U.S. indices are mixed in late trading Wednesday with the SPDR S&P 500 ETF Trust SPY, tracking the S&P 500, up 0.16% at $612.48 and the Invesco QQQ Trust QQQ, tracking the Nasdaq 100 index, down 0.06% at $539.06 at the time of publication. 

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