00:00 Brooke
The Federal Reserve just released the minutes from its December meeting showing a tight split on the latest rate cut. Yahoo Finance senior Fed correspondent Jennifer Schonberger joins us now with the details. Jen.
00:15 Jennifer Schoenberger
Hey there, Brooke. That’s right. Cutting rates in December was a close call for some at the Federal Reserve, while some think it will be some time before they cut rates again, according to minutes from the December policy meeting that were released this afternoon.
00:30 Jennifer Schoenberger
Those minutes reading the quote, most participants judged that further downward adjustments to the target range for the Fed funds rate would likely be appropriate if inflation eased over time as expected. With respect to the extent and timing of additional adjustments to the target range for the Fed funds rate, some participants suggested that under their economic outlook, it would likely be appropriate to keep the target range unchanged for some time following a reduction in the range at this meeting.
00:58 Jennifer Schoenberger
Now when it came to the reduction of rates this month, the officials were divided. While most officials were in favor of cutting rates due to concerns about the labor market, there were some who preferred keeping interest rates steady because they are concerned that inflation has stopped here. Now, there were some who voted in favor of cutting rates, but they could have voted in favor of keeping rates unchanged because they thought, we’re going to get a bunch of new data after the meeting
01:21 Jennifer Schoenberger
which will better inform our decision on whether there is a need to reduce rates again. And anyway, there were a few, some of whom we know, including the President of the Kansas City Fed Jeff Schmid who thought that a rate cut was not justified because there was no significant deterioration in the labor market.
01:34 Jennifer Schoenberger
Now, looking ahead to next year as far as the outlook for inflation and the labor market, Fed officials still believe that inflation will continue to quote somewhat elevated in the near term. They think, however, that any upward pressure from tariffs on inflation will begin to subside, although the extent and timing of this remains uncertain. And there are concerns that perhaps the upward pressure and tariffs on costs for businesses could still be passed on to consumers. So keep an eye on that.
02:07 Jennifer Schoenberger
Now, when it comes to the labor market, they think this will stabilize next year, although the outlook is uncertain because we had a delay with official government data due to the shutdown. Still, many see negative risks for the labor market. The bottom line here, Brooke, these minutes indicate that the Fed is unlikely to cut rates again anytime soon.
02:30 Brooke
Now, Jen, to add to all of this, President Trump is also threatening to sue Fed Chair Jerome Powell and says he will cite love to fire him. I mean, how risky is this for the Fed in 2020?
02:45 Jennifer Schoenberger
Yeah, I mean, look, I would never put it behind the president to do anything on this front, would I? Always on the table, but these comments that you refer to, that the president made late yesterday afternoon, he also said in the same sentence that, look, it’s a little bit close to the time that I will be nominating the next president of the Federal Reserve. So maybe I won’t do it, maybe I will. He left the question mark in the air.
03:09 Jennifer Schoenberger
But by the time he announces that nominee and that nominee goes through the confirmation process, it’s time for that person to take the helm. So it might not be worth it for the president to do it. If he were to file a lawsuit, I expect it to escalate to the Supreme Court. Uh something we saw with Fed Governor Lisa Cook, a case that the high court will hear next month in January. So, it’s possible, but I don’t think it’s likely.