Fed officials are worried about tariffs' impact on inflation and see rate cuts on hold, minutes show
Federal Reserve officials in January agreed they would need to see inflation come down more before lowering interest rates further, and expressed concern about the impact President Donald Trump's tariffs would have in making that happen, according to meeting minutes released Wednesday.
Policymakers on the Federal Open Market Committee unanimously decided at the meeting to hold their key policy rate steady after three consecutive cuts totaling a full percentage point in 2024.
In reaching the decision, members commented on the potential impacts from the new administration, including chatter about the tariffs as well as the impact from reduced regulations and taxes. The committee noted that current policy is «significantly less restrictive» than it had been before the rate cuts, giving members time to evaluate conditions before making any additional moves.
Members said that the current policy provides «time to assess the evolving outlook for economic activity, the labor market, and inflation, with the vast majority pointing to a still-restrictive policy stance.
Participants indicated that, provided the economy remained near maximum employment, they would want to see further progress on inflation before making additional adjustments to the target range for the federal funds rate.»
Officials noted concerns they had about the potential for policy changes to keep inflation above the Fed's target.
The president already has instituted some tariffs but in recent days has threatened to expand them.
In remarks to reporters Tuesday, Trump said he is looking at 25% duties on autos, pharmaceuticals and semiconductors that would accelerate through the year. While he did not delve too far into specifics, the tariffs would take
