Federal Reserve Minutes comparison — 17 September 2025 vs 28 January 2026

This Federal Reserve minutes comparison covers 17 September 2025 and 28 January 2026. Overall, the newer document was more hawkish. The current document represents a hawkish shift across inflation, labour market, and rate path relative to the prior, as the Fed paused its easing cycle amid persistent inflation and stabilizing labour conditions. The next decision is likely to maintain the hold unless inflation shows clear progress or labour deteriorates sharply.

What changed

More hawkish. The current document represents a hawkish shift across inflation, labour market, and rate path relative to the prior, as the Fed paused its easing cycle amid persistent inflation and stabilizing labour conditions. The next decision is likely to maintain the hold unless inflation shows clear progress or labour deteriorates sharply.

Inflation — More hawkish. Inflation rhetoric shifted from stable above target to more persistently elevated with upside risks, as core PCE reached 3.0% and most participants cautioned about slow progress.
Labour Market — More hawkish. Labour market assessment moved from clearly softening to stabilizing with forecasts of tightening, reducing urgency for easing.
Rate Path — More hawkish. The committee held rates steady despite prior expectations of cuts, with a majority now citing inflation risks over labor weaknesses, though two dissidents favored easing.
Balance Sheet — Little changed. Balance sheet discussion remained limited; the operational plan for reserves was unchanged with no directional signal.

Key wording

17 September 2025

Almost all respondents to the Desk survey expected a 25 basis point cut in the target range for the federal funds rate at this meeting, and around half expected an additional cut at the October meeting.
rate path: Confirms market pricing of a cut; signals potential further easing.

Markets appeared to interpret data releases and FOMC communications as indicating that the baseline outlook was little changed but that downside risks to the labor market had increased.
rate path: Shift in risk assessment toward labor market downside, supporting rate cuts.

Total consumer price inflation—as measured by the 12-month change in the PCE price index—was estimated to have been 2.7 percent in August, based on the data from the consumer and producer price indexes. Core PCE price inflation, which excludes changes in consumer energy prices and many consumer food prices, was estimated to have been 2.9 percent in August.
inflation: Inflation remains above target but stable; not accelerating, allowing Fed to focus on labor.

The unemployment rate edged up to 4.3 percent in August, a little higher than it had been at the beginning of the year. ... Average monthly increases in total nonfarm payrolls over July and August were weak, and job gains were revised down notably in May and June.
labour market: Softening labor market justifies rate cuts to support employment.

The Bureau of Labor Statistics' (BLS) preliminary estimate of the benchmark revision for April 2024 through March 2025 indicated that the level of payrolls for March was more than 900,000 lower than had been reported.
labour market: Large downward revision underscores weakness; increases urgency for easing.

Near-term expectations for the policy rate had moved lower in response to weaker-than-expected employment data and the apparent rise in downside employment risks.
rate path: Market pricing of cuts is linked to labor data, reinforcing data-dependent easing path.

28 January 2026

Market-based measures of policy rate expectations indicated one to two 25 basis point rate cuts this year, and the median modal path of the federal funds rate, as given in the Desk survey, continued to indicate expectations of two 25 basis point rate cuts this year.
rate path: Markets price in two cuts; unchanged expectation signals no shift in consensus.

Shorter-term Treasury yields were little changed, while longer-term yields rose a few basis points on net; the Treasury curve steepened slightly as a result.
rate path: Steepening curve may reflect term premium concerns, complicating rate-cut outlook.

Near-term inflation compensation continued to decline amid lower-than-expected consumer price index (CPI) readings, lower energy prices, and lower-than-anticipated pass-through of tariffs to customers; forward rates suggested that near-term inflation would stabilize close to current levels for the rest of the year.
inflation: Declining inflation compensation supports case for eventual easing.

Labor market conditions showed signs of stabilizing following a period of gradual cooling.
labour market: Stabilization suggests no further deterioration, but no tightening either.

the unemployment rate was expected to decline gradually starting this year, moving below the staff’s estimate of its natural rate by the end of the year and remaining below the natural rate through 2028.
labour market: Tightening labour market adds to inflation pressure, delaying rate cuts.

The market-implied expected path of the federal funds rate, nominal Treasury yields, and swap-based measures of inflation compensation were little changed, on net, over the intermeeting period.
rate path: Market expectations for the rate path were unchanged, indicating no surprise from the meeting.

Official documents

Background reading

Earlier meeting · Later meeting · Next comparison · Methodology