Dollar Gains on Hawkish Fed Tone 💵📈

Fed Cuts 25bp with Cautious View on Inflation

The FOMC Minutes from the latest decision-making meeting of the US Federal Reserve have just been published. Recall that on November 7 the Fed decided to cut rates by 25 basis points, continuing the easing cycle but at a more measured pace compared to the previous 50 basis point cut. Here are the most important transcripts of the minutes of that event:

• The Committee unanimously supported the 25 bps cut in the fed funds rate, showing greater consensus compared to the previous meeting's split decision.
• Notable removal of language expressing "greater confidence" in inflation moving sustainably toward 2% target, suggesting increased caution about inflation progress.
• Committee sees risks to both employment and inflation goals as "roughly in balance", marking a shift from previous emphasis on inflation risks.
• Economic activity continues to expand at "solid pace", but labor market conditions have "generally eased" and unemployment has moved up while remaining low.
• Committee emphasizes data dependency for future rate decisions, will "carefully assess incoming data, evolving outlook, and balance of risks" for additional adjustments.
• Labor market showing clearer signs of softening, marking a shift from previous assessments, though overall conditions remain relatively tight.
• The statement maintains a balanced tone on policy direction, prepared to adjust stance if risks emerge that could impede attainment of Committee's goals.
• All FOMC members, including previous dissenter Michelle Bowman, voted in favor of the policy action, suggesting broader agreement on the pace of policy normalization.