The December release of the latest minutes from the Federal Open Market Committee arrives at a delicate moment for global markets. Investors are balancing signs of economic resilience against persistent inflation pressures and a labour market that is gradually cooling.
These minutes, covering the December 9–10, 2025 meeting, offer a detailed look into how policymakers are interpreting recent data and how they see the path ahead.
For markets, including crypto, the document matters less for what it announces and more for how it frames risk, uncertainty, and future policy flexibility.
FOMC Minutes Recap
The December minutes paint a picture of an economy that remains resilient but increasingly uneven beneath the surface.
Policymakers observed that real GDP growth had been moderate through most of 2025, supported by solid consumption and strong business investment, particularly from large technology firms increases spending on AI-related infrastructure.
At the same time, labour market conditions showed clear signs of cooling. Job gains slowed through the year, the unemployment rate edged up to 4.4% by September, and hiring intentions across many sectors remained muted.
Inflation remained a central concern. Both headline and core PCE inflation stood at 2.8%, higher than earlier in the year and still above the Committee’s 2% target.
Participants largely attributed the renewed firmness in goods inflation to higher tariffs, while services inflation, especially housing-related components, showed clearer signs of easing.
Importantly, longer-term inflation expectations were viewed as stable, which policymakers repeatedly emphasised as a critical anchor for future decision making.
Financial conditions were described as somewhat tighter but orderly. Treasury yields moved modestly higher, driven mainly by rising real yields rather than inflation expectations.
Equity markets were volatile but broadly unchanged, with large technology stocks particularly sensitive to both economic data and developments in AI investment.
Credit markets remained open, with large firms accessing funding easily, even as borrowing conditions for households and small businesses stayed restrictive.
A major focus of the meeting was liquidity and balance sheet management. Reserve balances had declined significantly since the start of balance sheet runoff, and several indicators suggested reserves were now within the “ample” range rather than comfortably above it.
Repo rates were elevated and volatile, prompting concerns about future seasonal drains on liquidity, particularly around tax payments in April.
In response, participants broadly agreed that beginning reserve management purchases of shorter-term Treasury bills would be prudent to maintain smooth market functioning.
Crucially, policymakers stressed that these purchases were purely technical and not intended to signal a change in the stance of monetary policy.
On rates, the Committee voted to lower the federal funds target range by 25 basis points to 3.5–3.75%.
The decision reflected growing downside risks to employment and a view that inflation risks, while still present, had become more balanced compared with earlier in the year.
However, the minutes make clear that this was not a unanimous or straightforward decision. Several participants felt progress on inflation had stalled, while others viewed the move as necessary to prevent a sharper labour market deterioration in 2026.
Is the FOMC Dovish or Hawkish Now?
The tone of the December minutes sits firmly in the middle ground, leaning cautiously dovish without abandoning vigilance. Policymakers clearly see the need to move towards a more neutral policy stance, but they remain wary of declaring victory on inflation too early.
This balance is evident in repeated references to data dependence and the absence of any preset path for future rate cuts.
On the dovish side, the Committee acknowledged that downside risks to employment had increased and that the labour market could weaken more abruptly in a low-hiring environment.
The decision to cut rates, despite inflation remaining above target, reflects a willingness to act pre-emptively rather than wait for sharper deterioration.
Participants also noted that the inflationary effects of tariffs were likely to fade over time, reducing the risk of persistent price pressures.
At the same time, the minutes retain a hawkish undertone. Inflation risks were still described as tilted to the upside, and several participants warned that easing too aggressively could undermine confidence in the Fed’s commitment to its 2% goal.
The emphasis on keeping long-term inflation expectations anchored suggests policymakers remain sensitive to credibility concerns after several years of above-target inflation.
For crypto markets, this balanced stance matters. A gradual shift towards lower rates tends to support risk assets by easing financial conditions and improving liquidity expectations.
However, the absence of a clear signal for rapid or aggressive easing limits the scope for excessive risk-taking.
The focus on balance sheet mechanics rather than outright expansion also suggests liquidity support will be controlled rather than expansive.
Crypto investors are likely to interpret the minutes as modestly constructive but not a green light for unchecked optimism.
Lower rates reduce the opportunity cost of holding non-yielding assets and support broader risk appetite, yet persistent inflation and cautious Fed messaging act as a restraint.
The result is an environment where crypto may benefit from improving macro conditions, but price movements remain sensitive to incoming data rather than policy promises.
Conclusion
The December 2025 FOMC minutes confirm that policymakers are navigating a narrow path between supporting growth and preserving inflation credibility.
A modest rate cut, combined with careful balance sheet adjustments, reflects concern about labour market risks without signalling complacency on prices.
For markets, including crypto, the message is one of cautious flexibility rather than conviction. The Fed is easing, but slowly, and future moves will depend heavily on data. In that context, stability rather than exuberance remains the defining feature of the macro backdrop.