Fed divided on rate cuts, inflation progress: FOMC minutes

Yahoo Finance Video

Thu, February 19, 2026 at 5:26 AM GMT+9

The Federal Reserve’s minutes from its January FOMC meeting illustrated how divided central bank officials are over interest rates, with voting members indicating they could push for additional rate cuts if inflation continues cooling.

Yahoo Finance Senior Fed Reporter Jennifer Schonberger shares the biggest takeaways from the Fed’s meeting minutes, while also commenting on the Financial Times reporting that European Central Bank (ECB) president Christine Lagarde plans to step down before the end of French President Emmanuel Macron’s current term.

To watch more expert insights and analysis on the latest market action, check out more Market Domination.

Video Transcript

00:00 Josh

Well, Fed officials were divided on the path forward for interest rate cuts in their latest meeting in January. The latest meeting minutes indicate officials were conflicted over fighting inflation and supporting a weak labor market. Yahoo Finance’s Jennifer Schonberger has been going through the latest Fed minutes at that just came out. Jen.

00:20 Jennifer Schonberger

Hey there, Josh. That’s right. Those minutes revealing a very divided Federal Reserve with several members of the Fed seeing room for further rate cuts, yes, cuts plural if inflation drops. Though some see holding policy for quote some time to assess inflation, while a number see no rate cuts at all. The minutes reading, quote, several commented that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation were to decline in line with their expectations. Now, as I said, some thought that it would be appropriate to hold rates steady for quote some time to further assess inflation, while a number thought that more rate cuts may not be needed unless inflation was firmly falling back down to the Fed’s 2% target.

01:21 Jennifer Schonberger

Now, underscoring concerns of inflation, several members posited the notion of changing language in the policy statement to state that the Fed would be open to raising rates, that’s right, I said raising rates, if inflation stays above the Fed’s 2% target, recall they retained language in the policy statement that read in considering the extent and timing of additional adjustments, meaning additional rate cuts.

02:02 Jennifer Schonberger

Now, as far as their outlook for inflation and the job market, most Fed officials caution that progress towards their 2% inflation goal could take longer and be uneven. They said that the risk of inflation running persistently above 2% was quote meaningful. Now, when it comes to the job market, they see signs of stabilization and they see that the downside risks to the job market have diminished, but aren’t gone all together.

02:37 Jennifer Schonberger

Now, several officials did also comment on equity valuations, saying that stock valuations were high at the time, specifically signaling out AI and a uh several uh stocks in which AI is concentrated, IE perhaps the Mag 7. Of course, we know the rest of the story since the three weeks have passed, but clearly officials also watching these developments in the stock market. Josh.

03:09 Josh

And Jen, while we have you, I want your take on this this FT report, Jen, that European Central Bank President considering stepping down early. What do you make of that headline?

03:26 Jennifer Schonberger

Yeah, that’s right. There was a report in the Financial Times that uh European Central Bank President Christine Lagarde may step down from her term before it’s up in October 2027. Uh an ECB uh spokesperson refuting that telling me in a statement that uh President Lagarde is totally focused on her mission and has not taken any decision regarding the end of her term. Of course, it is France and Germany that have the largest say in who will be the next president of the ECB and France’s expected to have an election in April of 2027. So this consternation coming against that backdrop. Josh.

04:13 Josh

All right, Jen, great stuff as always. Thank you.

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