Investing.com — Federal Reserve policymakers were in favor of slowing the pace of rate cuts on concerns about stalling disinflation, according to the minutes of the Federal Reserve’s Dec. 17-18 meeting released Wednesday.
After the December meeting, the “Committee would likely slow the pace of further adjustments to the stance of monetary policy,” the minutes showed. The more cautious sentiment among Fed members on further rate cuts was prompted by slower progress on curbing the pace of inflation toward the 2% target.
“Participants commented that the overall pace of disinflation had slowed over 2024 and that some recent monthly price readings had been higher than anticipated,” the minutes added. Several Fed members “observed that the disinflationary process may have stalled temporarily or noted the risk that it could,” it added.
At the conclusion of its December meeting, the Federal Open Market Committee, or FOMC, cut its benchmark rate to a range of 4.25% to 4.5%.
The decision on whether to back a cut at the December meeting appeared to be a close call, with the minutes showing that one member voted against a cut, while the majority of participants noted that their “judgments about this meeting’s appropriate policy action had been finely balanced.”
The third cut in a row in December, however, was deemed a hawkish cut as the Fed members reined in the number of rate cuts for next year.
At In the summary of economic projections that accompanied the rate decision, Fed members expected that it would take longer for inflation to reach the 2% than previously expected and saw just two rate cuts for this year, down from four cuts previously.
Since the Fed meeting, incoming economic data including the most recent ISM services survey, released Tuesday, which showed signs of fresh price pressures, has stoked further fears of a shallower rate cut cycle.
Fed governor Christopher Waller on Wednesday allayed some fears that rate cuts are off the table this year, saying that it he expects inflation to continue to slow, allowing the Fed to continue its rate-cutting journey.
Traders now expect the Fed to stay on pause until June, according to Investing.com’s Fed Rate Monitor Tool.