FOMC Minutes reflect concerns over Trump’s policies

At January’s meeting, Fed officials debated whether it might be wise to slow or even pause the reduction of their balance sheet holdings, given that renewed concerns over the federal debt ceiling have come back into play. In addition, the Minutes showed the staff’s economic outlook remained largely unchanged from December.

The minutes pointed out that the Committee participants began discussions related to their review of the Federal Reserve’s monetary policy framework. This review is focused on two specific areas: the Committee’s Statement on Longer-Run Goals and Monetary Policy Strategy, which presents the Committee’s approach to the conduct of monetary policy, and the Committee’s policy communication practices. The Committee’s 2 percent longer-run inflation goal will be retained and is not a focus of the review.

The Dow Jones Industrial Average (DJIA) was trading around 44,380 as investors awaited the Federal Reserve’s January meeting minutes. Fed policymakers emphasized patience and removed language suggesting inflation progress in their latest statement. Market sentiment weakened after US President Donald Trump announced new tariffs on key imports.

The Federal Reserve kept interest rates steady at 4.25%-4.50% but removed language suggesting inflation progress. Fed officials reiterated the need for more data before making policy adjustments. Philadelphia Fed President Patrick Harker and Atlanta Fed President Raphael Bostic signaled no rush to cut rates. Trump announced 25% tariffs on cars, pharmaceuticals, and semiconductors, effective by April. Trade tensions rose as US-Russia peace talks on Ukraine stalled, with Trump blaming Ukraine for the lack of progress. Market participants remained highly cautious ahead of the release of the Federal Open Market Committee (FOMC) minutes.