Fed Officials Signal No Hurry for Rate Cuts, Raise Possibility of Hikes

Minutes show divisions among policymakers as they contend with mixed economic signals

Feb. 22, 2026 at 8:23am

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According to the minutes from the Federal Reserve's January meeting, officials signaled no rush to restart interest rate cuts after pausing reductions last month. In fact, several policymakers even raised the possibility of rate increases if inflation remains stubbornly high. The record of the latest gathering underscored the sharp divisions that have plagued the central bank as it contends with a mixed economic picture after a series of rate reductions last year.

Why it matters

The Fed's policy decisions have significant implications for the broader economy, impacting everything from borrowing costs for businesses and consumers to the strength of the dollar. The divisions among policymakers reflect the challenges the central bank faces in balancing its dual mandate of price stability and maximum employment amid conflicting economic signals.

The details

Several policymakers indicated that there was still a path to lower rates this year if inflation declined as expected, while others signaled support to hold rates steady until there was 'clear indication that the progress of disinflation was firmly back on track.' The minutes showed that several policymakers wanted the Fed to convey 'the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels.'

  • The Fed held rates steady at its January meeting, voting 10-2 to maintain the previous 3.5 percent to 3.75 percent level.
  • The decision to pause came after three consecutive contentious meetings at which officials splintered over how to contend with a slowing labor market and intensifying inflationary pressures caused by President Trump's tariffs.
  • The Fed lowered rates between September and December by a cumulative 0.75 percentage point, although those decisions featured dissents in both directions.

The players

Jerome H. Powell

The Federal Reserve chair, who remarked on the resilience of the economy and noted that the jobs market appeared to be stabilizing.

Christopher J. Waller

A Federal Reserve governor who dissented in favor of a quarter-point cut, arguing that the labor market was at risk without additional support from the central bank.

Stephen I. Miran

A Federal Reserve governor who dissented in favor of a quarter-point cut, arguing that the labor market was at risk without additional support from the central bank.

Kevin M. Warsh

A former Federal Reserve governor who President Trump said would replace Powell as chair if confirmed by the Senate.

Kevin A. Hassett

President Trump's top economic adviser, who criticized a study by Federal Reserve Bank of New York economists on the economic burden of the president's tariffs.

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What they’re saying

“The economy has once again surprised us with its strength, not for the first time.”

— Jerome H. Powell, Federal Reserve chair

“We're not trying to articulate a test for when to next cut, or whether to cut at the next meeting. We're well positioned.”

— Jerome H. Powell, Federal Reserve chair

“It's the worst paper I've ever seen in the history of the Federal Reserve system, and the authors should be disciplined.”

— Kevin A. Hassett, President Trump's top economic adviser

What’s next

The Fed's next policy meeting is scheduled for March 17-18, where officials will decide whether to hold rates steady or make further adjustments.

The takeaway

The Fed's policy deliberations reflect the central bank's struggle to navigate a complex economic landscape, with officials divided on the appropriate path forward. While the labor market appears resilient, concerns about persistent inflation could prompt some policymakers to consider rate hikes, underscoring the delicate balance the Fed must strike.