FOMC December 2025 Minutes Analysis: Divided Committee and Inflation Concerns

This analysis is based on the Invezz report [1] published on December 30, 2025. On December 10, 2025, the Federal Open Market Committee (FOMC) voted 9-3 to cut the federal funds rate by 25 basis points (bps) to a range of 3.5% to 3.75% [0][2]. The December 30 minutes release revealed deep committee divisions: two officials (Jeffrey Schmid and Austan Goolsbee) dissented in favor of holding rates steady over concerns inflation could become “permanently stuck” above the Fed’s 2% target [3][4], while a third official (Stephen Miran) favored a larger 50 bps cut [3][4].

Short-term market impacts (December 10, rate cut announcement):

• Equity indices: S&P 500 (+0.78%), NASDAQ (+0.50%), Dow Jones (+1.02%) [0]
• Bond market: 10-year U.S. Treasury yield fell 0.95% to 4.16% [0]

Medium-term market impacts (December 30, minutes release):

• Equity indices: Muted reactions (S&P 500 +0.03%, NASDAQ -0.10%, Dow Jones -0.08%) [0]
• Bond market: 10-year Treasury yield stable at ~4.12% [0]

Inflation context includes November 2025 CPI data (2.7% YoY, still above target) [5] and a 6-week government shutdown delaying key economic reports, creating decision-making uncertainty for officials [6]. Fed projections showed divisions on 2026 rate paths: 7 officials expected no cuts, 8 forecast two or more reductions, and 4 supported one cut [2].

1. Committee Divisions
   : The split vote highlights conflicting views on inflation trajectories. Dissenters’ focus on “entrenched inflation” indicates concerns about stalling progress toward the 2% target, despite the November CPI decline [5].
2. Data Uncertainty Impact
   : The government shutdown’s delayed reports made it difficult for officials to fully assess economic conditions, amplifying divisions [6].
3. Market Pricing Efficiency
   : Muted reactions to the minutes suggest the market had already priced in both the rate cut and underlying inflation concerns [0].

1. 2026 Market Volatility
   : The FOMC’s divided stance may increase volatility as investors attempt to predict future rate decisions [0].
2. Rate Reversal Risk
   : Persistent inflation above 2% could force the Fed to reverse rate cuts, negatively impacting equities and bonds [0].
3. Data Reliability Concerns
   : Delayed economic reports due to the shutdown create uncertainty, making Fed decisions less predictable [6].

No clear opportunities are identified in the analysis, as the focus remains on inflation risks and committee divisions.

• FOMC voted 9-3 to cut rates by 25 bps on December 10, 2025 [0][2].
• Minutes (December 30) revealed two dissenters over entrenched inflation and one favoring a larger cut [3][4].
• November 2025 CPI: 2.7% YoY (above 2% target) [5].
• A government shutdown delayed key economic data, creating uncertainty [6].
• Market reactions to the minutes were muted, with stable indices and yields [0].
• Key risks: 2026 volatility, rate reversals, and data reliability issues [0].