Fed minutes show it could be ‘some time’ before another rate cut

00:00 Brooke

The Federal Reserve recently released minutes from its December meeting that show a sharp split on the latest rate cut. Yahoo Finance Senior Fed Correspondent Jennifer Schoenberger joins us with details. Jane.

00:15 Jennifer Schoenberger

Hey, Brooke. That’s right. Cutting rates in December was a close call for some at the Federal Reserve, while some think it will be a while before they cut rates again, according to minutes from the December policy meeting that were released this afternoon.

00:30 Jennifer Schoenberger

After reading the minutes quote, many participants decided that a further downward adjustment to the target range for the Fed funds rate would be appropriate if inflation fell as expected over time. Regarding the extent and timing of further adjustments to the target range for the Fed funds rate, some participants suggested that under their economic outlook, it would be appropriate to keep the target range unchanged for some time after reducing the range at this meeting.

00:58 Jennifer Schoenberger

Now when it comes to this month’s rate cut, officials are divided. While most officials favored cutting rates due to concerns about the job market, there were some who favored keeping interest rates steady because they are concerned that inflation has stalled here. Now, there were some who voted to cut rates, but could have voted to keep rates unchanged because they thought, we’re going to get a bunch of new data after the meeting.

01:21 Jennifer Schoenberger

This will better inform our decision on whether we need to cut rates again. And yet, there were some, some of whom we know, including Kansas City Fed President Jeff Schmidt, who thought that rate cuts were not justified because the job market was not significantly down.

01:34 Jennifer Schoenberger

Now, looking ahead to next year for inflation and the job market, Fed officials still believe inflation will remain somewhat above quoted in the near term. However, they think that any upward pressure from the tariff on inflation will begin to ease, although its extent and timing remain uncertain. And there are concerns that perhaps upward pressure and tariffs on costs for businesses could still be passed on to consumers. So they are monitoring it.

02:07 Jennifer Schoenberger

Now, when it comes to the job market, they think it will stabilize next year, although the outlook is uncertain because we have a delay in official government data due to the shutdown. Still, many see downsides to the job market. Bottom line here, Brooke, these minutes indicate that the Fed is unlikely to cut rates again anytime soon.

02:30 Brooke

Now, Jane, to add to all of this, President Trump is also threatening to sue Fed Chairman Jerome Powell and he will cite Love to fire him. I mean, how much risk is it for the Fed in 2020?

02:45 Jennifer Schoenberger

Yeah, I mean, look, I’m never going to leave the president to do anything on this front, right? It’s always on the table, but these comments that you refer to, that the president made yesterday afternoon, he also said in the same sentence that look, it’s close to the time to nominate the next chairman of the Federal Reserve. So maybe I won’t do it, maybe I will. He left a question mark in the air.

03:09 Jennifer Schoenberger

But until he announces that candidate and that candidate goes through the confirmation process, it is only a matter of time before that person takes the lead. So it may not be appropriate for the President to do so. If he does bring a case, I hope it escalates to the Supreme Court. Uh, something we saw with Fed Governor Lisa Cook, a case the high court will hear next month in January. So, it’s possible, but I don’t think it’s possible.