January Monetary Policy Meeting Minutes Released! Attention! The Federal Reserve's "Internal Divisions Widen"

The Federal Reserve’s internal disagreements intensify.

On Wednesday, February 18 (local time), the three major U.S. stock indices all closed higher. By the end of the session, the Dow rose 129.47 points, up 0.26%, to 49,662.66; the Nasdaq increased 175.25 points, up 0.78%, to 22,753.63; and the S&P 500 gained 38.09 points, up 0.56%, to 6,881.31.

That day (early morning February 19 Beijing time), the Federal Reserve released the minutes from its January monetary policy meeting. The minutes showed clear disagreements among officials regarding the outlook for interest rates, wavering between curbing inflation and supporting the labor market. Several officials indicated that if inflation declines as expected, further rate cuts are likely appropriate. Some policymakers were cautious about further rate reductions. Notably, the minutes also mentioned for the first time that some officials discussed the possibility of raising interest rates.

Additionally, the U.S. claimed that the possibility of military action against Iran still exists, leading to a sharp rise in international oil prices.

Federal Reserve Releases Meeting Minutes

The minutes from the Federal Reserve meeting indicated that participants generally agreed to keep the key interest rate unchanged in the range of 3.5% to 3.75%. However, there were disagreements among officials about the future direction of monetary policy.

The minutes stated that “almost all” Fed officials supported maintaining the current rate, viewing it as an assessment of the economy after a 75 basis point cut last year. However, two Fed governors, Stephen M. Miller and Christopher Waller, voted against, favoring a 25 basis point cut.

Furthermore, there was still disagreement among Fed officials about what might happen next. The minutes showed that some participants believed that if inflation falls as expected, further easing of the federal funds rate target range might be appropriate. Some argued that while waiting for new inflation and economic data, rates should be “paused for a period,” with some suggesting that rate cuts should not occur until there is evidence that “disinflation is back on track.” A few officials also proposed that the possibility of rate hikes should not be ruled out and hoped that the post-meeting statement would more clearly reflect that “rate decisions are two-way.”

Regarding inflation outlook, Fed officials expect inflation to move toward 2%, but the pace and timing remain uncertain. The impact of tariffs on core goods prices may begin to weaken this year. Most participants warned that progress toward the 2% inflation target could be slower and more uneven than generally expected, and the risk of inflation remaining above target should not be overlooked. Some officials also noted that persistent demand pressures could keep inflation elevated.

The minutes summarized the January debate as hawkish, as officials voted to keep policy rates steady in the current range of 3.50% to 3.75% and indicated they might maintain this level for some time. Investors expect the Fed to hold current rates until the June 16-17 meeting and to cut rates by 25 basis points at the meetings in September and possibly earlier.

According to the latest data from CME Group’s “FedWatch,” the probability of a 25 basis point rate cut by the Fed in March is 5.9%, with a 94.1% chance of rates remaining unchanged; for April, the probability of a cumulative 25 basis point cut is 20.5%, with a 78.5% chance of no change, and a 1.0% chance of a 50 basis point cut; by June, the probability of a 25 basis point cut is 49.8%.

In other markets, oil prices surged as Wall Street digested the latest developments between the U.S. and Iran. U.S. Vice President JD Vance stated on Tuesday that Iran failed to respond to the U.S. red lines during this week’s nuclear negotiations, and military action remains possible.

Wall Street experienced a quiet trading day, with major indices barely rising. The software sector, already under pressure due to concerns over AI disruptive impacts, declined on the day.

Google Enters AI Music Creation

In terms of sectors, the S&P 500’s eleven major sectors saw eight advance and three decline. The energy sector and non-essential consumer goods led gains with increases of 2.00% and 1.00%, respectively. Utilities and real estate sectors lagged, falling 1.70% and 1.45%.

Most large tech stocks rose. ASML gained over 3%, Amazon, Nvidia, Oracle, and Netflix rose over 1%, while Microsoft, Meta, Google A, Qualcomm, Broadcom, Apple, and Tesla saw modest gains. TSMC declined slightly, while Super Micro Semiconductor and Intel fell over 1%, and Boeing dropped over 2%.

Nvidia closed up 1.6%. On the news front, Meta Platforms announced it will use millions of Nvidia chips in its data center construction.

Amazon rose 1.8%. Previously, regulatory filings showed that hedge fund manager Bill Ackman’s Pershing Square increased its stake in the e-commerce giant by 65% in Q4 2025, making Amazon its third-largest holding. Prior to this, Amazon had experienced nine consecutive days of decline, with a four-day drop from last Tuesday to Friday, losing about 18% of its market value—the worst streak since 2006—erasing over $450 billion, amid investor doubts about the value of its AI spending plans.

Micron Technology surged 5.3%, with reports indicating that hedge fund manager David Tepper’s Appaloosa Management increased its holdings in the chipmaker.

Google A gained 0.43%, with a trading volume of $4.762 billion. Google and Apple are integrating generative AI music features into their core consumer apps, highlighting the mainstream adoption of advanced AI tools. Google announced in a blog post that its Gemini AI assistant can now generate 30-second music tracks based on user-uploaded text, photos, or videos, using Google DeepMind’s latest Lyria 3 model. The feature can produce customized lyrics or pure music audio, will be available to users over 18, and support multiple languages. Google said the new feature will debut on Gemini desktop first and will be available on mobile apps in the coming days. Additionally, its popular image generation model Nano Banana will generate custom covers for music works and add visual effects when users share track links.

Most financial stocks rose. Morgan Stanley, Charles Schwab, UBS, and Citigroup gained over 2%, while Goldman Sachs, BlackRock, Barclays, First Capital Financial, Wells Fargo, Bank of America, Mastercard, U.S. Bancorp, and Visa rose over 1%. Regional banks, Deutsche Bank, MetLife, BNY Mellon, JPMorgan Chase, American Express, and AIG saw slight increases, while Travelers Insurance, Mizuho Financial, and Hartford Insurance declined over 1%.

Most energy stocks rose. US Energy gained over 7%, Apache Oil over 4%, Schlumberger and ExxonMobil over 3%, BP, Western Oil, Shell, ConocoPhillips, and Imperial Oil over 2%, Chevron and Petrobras over 1%, while Duke Energy fell over 1%.

Popular Chinese concept stocks had mixed performances, with the Nasdaq Golden Dragon China Index (HXC) down 0.04%. Futu Holdings rose over 2%, Pinduoduo and New Oriental gained over 1%, while Ctrip, Bilibili, Baidu, JD.com, Alibaba, and NetEase saw modest increases. XPeng, NIO, Tencent Music, Li Auto, iQiyi, Tiger Securities, and Vipshop declined slightly, with Kingsoft Cloud dropping over 3% and Huya over 4%.