Fed minutes on Wednesday (8) may indicate challenges for further rate cuts
After cutting interest rates by 0.25 percentage points at the December 17-18 meeting, Fed Chair Jerome Powell said officials may now be "cautious" about further reductions.
Powell also noted that some officials have begun to approach upcoming decisions as if they were "driving on a foggy night or entering a dark room full of furniture" due to uncertainty about the impact of President-elect Donald Trump's tariff, tax and other proposals.
Projections released after the December meeting showed officials foreseeing just 0.5 percentage points of interest rate cuts this year, compared with a full 1 percentage point in September.
The minutes "should fully reflect this relatively hawkish view."
This would include discussing concerns that inflation could remain persistently high if interest rates are not kept adequately tight, and perhaps also discussing the fact that the interest rate needed to bring inflation fully back to the Fed’s 2 percent target has risen.
This would be part of the rationale for the committee now planning to slow the pace of rate cuts.