Most Federal Reserve officials believe that additional interest-rate cuts may be necessary if inflation continues to decline, but there is disagreement on when and how much to cut. The December meeting minutes highlighted the challenges policymakers faced in their decision-making process, with some focusing on labor market protection and others concerned about signaling a weaker commitment to the inflation target. Despite the lack of comprehensive economic data due to a recent government shutdown, the Fed’s decision to lower the benchmark rate by a quarter percentage point was met with some dissent. The economic debate continues, with some policymakers advocating for holding rates steady while others see further cuts as necessary. Markets responded cautiously, with low expectations for a January rate cut and Bitcoin trading modestly. As the U.S. economy shows growth and rising unemployment, Fed policymakers must carefully balance their decisions to avoid impacting risk assets in the future.
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