Fed Officials Wary of Further Rate Cuts Amid Inflation Concerns

Surprise shift in Fed minutes suggests some policymakers may push for rate hikes if inflation remains high

Published on Feb. 23, 2026

Got story updates? Submit your updates here. ›

The minutes from the Federal Reserve's January policy meeting revealed a surprising shift, with several officials suggesting the central bank may need to raise interest rates if inflation remains stubbornly high, despite the majority still being open to further rate cuts. This sets up a potential clash with President Trump, who has repeatedly called for lower rates.

Why it matters

The Fed's policy decisions have a significant impact on the broader economy, affecting everything from borrowing costs for businesses and consumers to the strength of the dollar. The apparent division among policymakers on the appropriate path forward complicates the task of President Trump's nominee for Fed chair, Kevin Warsh, who will have to navigate these competing views.

The details

While the minutes did not suggest most officials were contemplating rate hikes, they made clear the Fed is shifting away from agreeing on another rate cut. Several participants cautioned that further easing could be misinterpreted as diminishing the central bank's commitment to its 2% inflation target. However, another group of 'several officials' remained open to more rate cuts if inflation declined as expected, though most said progress could be slower than forecast.

  • The Fed's January 27-28 policy meeting is when these discussions took place.
  • The minutes of this meeting were released on February 18, 2026.

The players

Federal Reserve

The central banking system of the United States that sets monetary policy, including interest rates.

Kevin Warsh

The nominee for Federal Reserve chair, selected by President Trump to take over when Jerome Powell's tenure ends in May.

President Donald Trump

The current President of the United States who has repeatedly called for the Federal Reserve to lower interest rates.

Got photos? Submit your photos here. ›

What they’re saying

“The minutes carry a distinctly more hawkish tilt. This sets up an interesting dynamic if and when Kevin Warsh is confirmed as Fed chair.”

— Gregory Daco, Chief Economist at EY-Parthenon (Bloomberg)

“It's high time for the Federal Reserve to acknowledge this abundantly clear reality and cut rates to deliver further economic relief for American homebuyers and businesses.”

— Kush Desai, White House Spokesman (Bloomberg)

What’s next

The Senate will need to confirm Kevin Warsh as the next Federal Reserve chair, which could happen in the coming months. His policy views will be closely watched as he takes over the central bank's leadership.

The takeaway

The Fed's apparent internal divisions on the appropriate monetary policy path highlight the challenges the central bank faces in balancing its dual mandate of price stability and maximum employment. The outcome of this debate will have significant implications for the broader economy.