The latest Federal Reserve meeting minutes have sent signals that the market is paying close attention to. According to this document from mid-December, officials showed a clear divergence in their views on the future path of interest rates.

The core assessment is as follows: if inflation indeed gradually declines as expected, most participants believe that further rate cuts would be appropriate. However, there is a key caveat — some policymakers are more cautious and advocate for a pause after this round of rate cuts to observe market reactions first.

Why pause? A few officials argue that it’s necessary to have time to assess the real impact of the recent accommodative policies on the labor market and economic activity, as policy transmission always has a lag. It also allows decision-makers to respond more calmly to subsequent inflation changes.

This reflects the true state within the Federal Reserve: on one hand, they want to continue easing financial conditions to stimulate the economy; on the other hand, they remain wary of a rebound in inflation. The policy pace at the beginning of next year will depend on inflation data. For investors watching the Fed’s moves, this minutes indicate that officials have already stepped on the brakes regarding rate cuts and will not be as aggressive as before.