The recent release of the Federal Reserve's December meeting minutes has sparked widespread market attention. The minutes reveal that decision-makers are in a delicate balance internally, with disagreements among officials deeper than expected.

On the surface, most officials agree that interest rates should continue to be lowered gradually as inflation recedes. However, when it comes to specific timing and magnitude of cuts—"when to cut" and "how much"—there are significant differences between hawks and doves. The core of this contradiction lies in—should the focus be on protecting the labor market or on defending against inflation?

The dovish logic is clear: current policy needs to approach neutrality to avoid a sudden freeze in the labor market. Conversely, hawks hold the opposite view, warning that inflation could become "deep-rooted." If interest rates are cut now, it might undermine market confidence in the 2% inflation target.

The minutes also reveal a key date—January 2026. Some officials indicated that after rate cuts, rates could be held steady for a period, reinforcing market expectations that the Fed might hold steady at the January meeting next year. However, there's a problem: the median of official forecasts points to only one rate cut by 2026, but individual forecasts among officials vary widely, and no consensus has yet formed.

Data-wise, there are also contradictions. During the government shutdown from October to November, economic data was severely lacking. By November, the unemployment rate suddenly rose to 4.6%, the highest since 2021, posing a challenge for all parties involved.