FOMC Members Signal Policy 'At or Near Peak' for Tightening Cycle

The Federal Open Market Committee members signaled the monetary policy is "at or near its peak for this tightening cycle," minutes of their December meeting showed.

Last month, policymakers cut the target rate to a range of 4.25%-4.5% and forecast a slower pace of rate cuts this year than previously anticipated. The committee's so-called dot plot, which illustrates the projections by members of the FOMC, showed the median fed funds rate outlook at 3.9%, implying expectations of two cuts of 50 basis points each, by the end of 2025. That compares with their previous median outlook that called for a rate of 3.4%.

"They expected the Committee’s restrictive policy stance to continue to soften household and business spending, helping to promote further reductions in inflation over the next few years," the minutes quoted Fed officials as saying.

Federal Reserve Bank of Cleveland Beth M. Hammack voted in December against the cut, preferring instead to hold the benchmark borrowing cost steady at 4.5% to 4.75%.

For the meeting later this month, traders are pricing in a 95% chance that the benchmark interest rate will stay unchanged at its current level, according to the latest CME FedWatch Tool. That's up from 63% a month earlier.

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