Federal Reserve officials noted the need for a ‘cautious approach’ to future rate cuts.

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Federal Reserve officials have indicated that the US central bank should adopt a cautious approach in reducing interest rates.

In the minutes following the Fed’s December meeting on Wednesday, officials signaled heightened policy uncertainty as Donald Trump’s second term in office begins. Level Wounds may begin to freeze or even stop.

“Participants indicated that the committee is at or near the time when it is appropriate to slow down the pace of policy reform,” he said.

“Most participants said that since monetary policy is now highly restrictive, the Committee may take a cautious approach in considering adjustments to the stance of monetary policy.”

In December Fed It cut its key interest rate by a quarter-point to 4.25-4.5 percent, a full point lower than in September. But the authorities They forecast just two more rate cuts in 2025 and the US central bank is likely to end the rate-cutting cycle at its meeting later this month.

Fed officials are wary of future rate cuts amid concerns among economists that Trump’s plans for tariffs, tax cuts and immigration could spur another rate hike. It is cautious about the US inflation outlook.

According to the minutes, Fed officials believed that “the likelihood of higher inflation becoming more persistent has increased” – and was a central risk to the outlook.

“Participants expected inflation to remain around 2 percent, although recent higher-than-expected inflation, and the effects of potential changes in trade and immigration policy, indicated that the process could take longer than previously expected,” the minutes said.

However, some officials indicated that they still expect US monetary policy to unwind fairly, and dismissed concerns about the impact of tariffs.

In a speech at the OECD in Paris on Wednesday, Fed Governor Christopher Waller said he did not expect tariffs to have a “significant or sustained” impact on inflation, saying he would “support lowering our policy rate in 2025”. .

“Further tapering will depend on what the data tell us about moving toward 2 percent inflation, but my bottom line message is that I believe further tapering will be appropriate,” he said, referring to the Fed’s inflation target.

US government bond markets were little changed after the minutes were released, with the two-year Treasury yield at 4.29 percent and the 10-year benchmark up 0.02 percentage point to 4.7 percent. When prices fall, yields rise.

In equity markets, the S&P 500 moved between small gains and losses. Following Wednesday’s minutes, investors were betting that the central bank would deliver its first quarter-point rate cut of the year in July, as planned earlier in the day.