00:00 Brooke
The Federal Reserve has just released the minutes of its December meeting, showing serious differences in views on the latest interest rate cut. Yahoo Finance senior Fed reporter Jennifer Schonberger brings us the details now. Jane.
00:15 Jennifer Schoenberg
Hey Brooke. that’s right. For some at the Fed, a rate cut in December is a close call, while some believe it will be some time before they cut rates again, according to minutes of the December policy meeting released this afternoon.
00:30 Jennifer Schoenberg
According to the minutes, a majority of participants believed that further cuts to the federal funds rate target range might be appropriate if inflation declines over time as expected. Regarding the magnitude and timing of further adjustments to the federal funds rate target range, some participants said that based on their economic outlook, it may be appropriate to keep the target range unchanged for a period of time after lowering the target range for the federal funds rate at this meeting.
00:58 Jennifer Schoenberg
Now officials are divided over a rate cut this month. While most officials do favor lowering rates due to concerns about the job market, some favor keeping rates steady because they worry inflation has stalled. Now, some people did vote for a rate cut, but may also have voted to keep rates on hold because they thought, well, we’re going to get a bunch of new data after the meeting
01:21 Jennifer Schoenberg
This will better help us decide whether another rate cut is needed. Still, there are some (some of whom we know), including Kansas City Fed President Jeff Schmid, who believe a rate cut is unjustified because the job market has not deteriorated significantly.
01:34 Jennifer Schoenberg
Now, looking at the outlook for inflation and the job market next year, Fed officials still believe inflation will remain at a certain level in the short term. However, they do believe that any upward pressure from tariffs will begin to fade, although the extent and timing of this remains uncertain. There are concerns that rising cost pressures on businesses and tariffs may still be passed on to consumers. So they’re watching this very closely.
02:07 Jennifer Schoenberg
Now, when it comes to the job market, they think it will be stable next year, although the outlook is uncertain as official data is delayed due to the government shutdown. Still, many see downside risks to the job market. The bottom line, Brook, is that these minutes indicate that the Fed is unlikely to cut rates again anytime soon.
02:30 Brooke
Now, Jen, on top of that, President Trump has threatened to sue Federal Reserve Chairman Jerome Powell and said he would show love to fire him. I mean, how risky is this for the Fed in 2020?
02:45 Jennifer Schoenberg
Yeah, I mean, look, I would never ask the president to take action on this, right? It’s always on the table, but these comments that you mentioned were made by the president late yesterday afternoon, and he also said in the same sentence, look, it’s getting close to the time for me to nominate the next chairman of the Federal Reserve. So maybe I won’t do it, maybe I will. He left the question mark hanging in the air.
03:09 Jennifer Schoenberg
But when he announces his nominees and goes through the confirmation process, it’s that person’s time to take the helm. So it may not be worth it for the president to do this. If he were to sue, I would expect it to escalate to the Supreme Court. Well, we saw that with Lisa Cook, the governor of the Federal Reserve, and the high court is going to hear the case next month in January. So, it’s possible, but I don’t think it’s likely.