Fed minutes reveal deep division among officials over future interest rate cuts

WASHINGTON — Federal Reserve officials were deeply divided during their December policy meeting, according to minutes released late last month. Despite the internal friction, the Federal Open Market Committee (FOMC) voted 9-3 to lower the federal funds rate by a quarter percentage point to a range of 3.5% to 3.75%.

The three dissenting votes represent the highest level of opposition to a Fed policy decision since 2019. Even among those who supported the reduction, some officials described the move as a "close call."

The minutes from the Dec. 9-10 meeting were released earlier than scheduled due to the New Year holiday. The records reveal a committee struggling to balance a cooling labor market against inflation that remains stubbornly above the central bank's 2% target.

To further support financial markets, the Fed also decided to restart its bond-buying program.

The central bank’s updated "dot plot" of economic projections suggests the possibility of one additional rate cut in 2026, followed by another in 2027.

The Federal Reserve’s December meeting minutes reveal a central bank at a critical juncture, grappling with a fog of economic uncertainty and a mounting internal rift over the future path of monetary policy. The 9-3 vote split is more than a mere statistical outlier; it signals a deepening ideological divide between officials prioritizing a cooling labor market and those wary of "sticky" inflation fueled by the Trump administration’s tariff proposals and other fiscal catalysts.

Compounding these challenges is a significant degradation in the quality of the data informing these decisions. The minutes acknowledge that recent economic indicators remain distorted by the lingering effects of the previous government shutdown, creating a "data void." Executing high-stakes monetary policy under these conditions sharply elevates the risk of a policy error—either through overtightening that triggers a recession or premature easing that allows inflation to regain its footing.

Looking toward 2026, the FOMC’s voting composition is set to shift with the rotation of four new regional bank presidents, several of whom lean toward a more hawkish stance. This personnel change could recalibrate the committee’s balance of power, potentially making future rate cuts more difficult to secure. This stands in direct opposition to current market pricing, which remains heavily bet on further easing. The growing disconnect between a market expecting a dovish pivot and a Fed that is increasingly fractured and potentially more hawkish represents one of the primary tail risks for the U.S. economy this year.

The Federal Reserve’s decision to cut interest rates has a direct impact on Vietnamese-American small business owners, particularly those in the nail salon industry and phở restaurant sector. In community hubs like Little Saigon, lower rates reduce the cost of borrowing for business expansions, equipment upgrades, and daily operations. However, the current climate of uncertainty regarding future rate adjustments makes long-term financial planning a challenge for many entrepreneurs. While families looking to enter the housing market stand to benefit from more favorable mortgage rates, persistent market volatility continues to weigh on consumer confidence and broader financial decisions within the diaspora.