Two officials dissented in favor of 25 basis point rate cut at Jan. meeting (Waller and Miran)
Almost all participants supported maintaining rates at 3.5%-3.75%
Several participants open to 'two-sided' guidance including possible rate hikes
Vast majority judged downside risks to employment had diminished
Most officials saw risk of inflation stalling above 2% target
Staff economic outlook was stronger than in Dec. forecast
Officials saw core goods prices boosted by tariff increases
Some participants argued for holding rates steady for some time
Staff projected inflation to remain slightly higher than previous forecast
Many officials anticipated slower or more uneven progress toward inflation goal
Participants generally noted consumer spending supported by wealth gains
Staff expected real GDP growth to outpace potential growth through 2028
If you were hoping for any dovish breadcrumbs from these minutes, you're going to be disappointed.
The market is waiting for the new Fed chair to shake things up and for economic data. What's notable here is that the staff projection for economic activity was stronger than the December forecast, driven by incoming data and financial conditions. The staff's inflation forecast was revised slightly higher, reflecting expectations of tighter resource utilization and higher core import prices.
The other notable development in these minutes is the explicit mention of rate hikes as a possible policy direction.
Most participants cautioned that the path back to 2% inflation could be "slower and more uneven" than expected and flagged the risk of persistently above-target inflation as "meaningful." Some cited business contacts who planned to raise prices this year due to cost pressures including tariffs. Several participants went further, warning that cutting rates while inflation is still elevated could be misread as the Fed going soft on its 2% mandate — potentially making higher inflation more entrenched.
