The Fed is sounding more hawkish. Those voices may get louder in 2025.

The Federal Reserve is sounding more hawkish in the face of stubborn inflation, and those voices could get even louder in 2025.

Some new members of the Fed’s rate-setting committee who are due to gain voting power in January could tip the Fed further in the direction of fewer rate cuts.

The changeover in policymakers could reinforce a more cautious direction sketched out by the Fed on Wednesday even as it cut rates for its third consecutive meeting. Fed officials tapped the brakes on future expectations by scaling back their projected cuts next year to two from four, due largely to inflation stickiness.

The 2025 shake-up among policymakers is happening because of how the central bank divides votes on its Federal Open Market Committee, a 12-person body that has the final say on whether rates go up or down.

Every January, four of the 12 seats on that committee change hands due to a power-sharing agreement the Fed in Washington has with the 12 quasi-public regional Fed banks based around the country.

In 2025, those four spots will go to regional Fed presidents in Chicago, Boston, St. Louis, and Kansas City — Austan Goolsbee, Susan Collins, Alberto Musalem, and Jeff Schmid.

Some of these new members could make the FOMC marginally more hawkish, based on a review of their public comments in recent months.

They will gain the power to cast votes on rate-setting decisions, along with seven Fed governors (one of whom is Chair Jerome Powell) and the president of the New York Fed, who always has a permanent seat.

Departing the committee are Fed presidents from Cleveland, Richmond, Atlanta, and San Francisco — Beth Hammack, Tom Barkin, Raphael Bostic, and Mary Daly. They can still contribute to rate-setting discussions but won’t be able to cast a final vote.

Among the new 2025 FOMC members, Goolsbee is more dovish, urging a long-term view of how much inflation has fallen since its height in 2022. Collins tends to be neutral.

But Schmid and Musalem have stood out in recent months for their more hawkish commentary about the future path of rates.

“It remains to be seen how much further interest rates will decline or where they might eventually settle,” Schmid said last month while noting that the Fed was still correct to lower rates this year.

Those comments came after the Kansas City Fed president said back in October that he believed that interest rates could settle “well above” the levels seen in the decade before the pandemic — an era of exceptionally low rates.

Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards

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Musalem, meanwhile, said earlier this month that he favors a more “patient” approach to setting rates.

While the St. Louis Fed president said he expects inflation to get to 2% and that lowering rates over time would make sense, he also noted it’s important to keep the Fed’s options open.

The “time may be approaching to consider slowing the pace of interest rate reductions, or pausing, to carefully assess the current economic environment,” he said.

Updated projections released by the Fed on Wednesday show that many other Fed officials agree on a more cautious approach in 2025. The median estimate was for two cuts, down from the previous estimate of four.

Four officials predicted no cuts next year. One of these was likely Cleveland Fed president Beth Hammack, who dissented against the decision to cut rates this week by another 25 basis points and is losing her FOMC voting power in 2025.

Fed officials now see inflation as measured by their preferred gauge — the “core” Personal Consumption Expenditures index — finishing next year at an elevated 2.5%, up from a previous estimate of 2.2%. The Fed’s goal is to get inflation to 2%.

“The slower pace of cuts for next year really reflects both the higher inflation readings we’ve had this year and the expectation inflation will be higher,” Powell said in a press conference on Wednesday.

Officials are trying to navigate stubborn inflation at a time when President-elect Donald Trump has proposed extending tax cuts and, in some cases, lowering taxes while also affixing tariffs when he takes office next year.

With inflation still above the Fed’s target, policy uncertainty could create further caution for cutting rates.

Powell said some members of the Fed did take a very preliminary step to start to incorporate “highly conditional estimates of economic effects of policies into their forecast” at Wednesday’s meeting.

That suggests that some policymakers did account for potential shifts in regulation, immigration, trade, and tax policy under the new Trump administration.

EY chief economist Greg Daco said while he expects inflation to moderate in the early part of next year, that could change if deregulation, potential immigration restrictions, and tariffs lead to a renewed inflation impulse.

“We expect policymakers at the Fed will slow the recalibration process in 2025 … and navigate upside risks to inflation,” he said.

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