The Federal Reserve has indicated that further interest rate cuts are on hold, citing slower progress on inflation and a still-strong U.S. economy. However, the minutes from the December meeting may shed light on how policymakers feel about the next steps. Officials have already made it clear that they will be cautious in cutting rates due to the economic uncertainties surrounding the incoming Trump administration.

Fed Chair Jerome Powell emphasized the cautious approach, noting that some officials feel they are navigating “a foggy night” when it comes to future decisions, primarily due to uncertainties regarding President-elect Trump’s tariff, tax, and economic proposals.

The meeting minutes are expected to offer further insights into the Fed’s approach to interest rates. Projections from the meeting indicated just a half-point reduction in rates for 2025, a shift from previous expectations of a full percentage point cut.

The minutes may reveal concerns about inflation staying elevated if the Fed does not keep interest rates restrictive enough. Analysts speculate that the Fed could slow the pace of cuts in response to ongoing economic strength, with inflation remaining just above the 2% target at 2.4%.

U.S. economic indicators, including steady growth, low unemployment, and inflation measurements, have shown resilience. However, Fed officials, including Richmond Fed President Thomas Barkin, have said they would need to see clear signs of economic weakness, such as a drop in hiring or rising unemployment, before making further rate cuts.

With jobs data set for release, there will be new insights into the labor market and how the economy is faring. The Fed’s minutes could also provide details on the future of quantitative tightening—a process where the Fed has reduced its bond holdings by approximately $2 trillion since 2022.