The Fed sounds more hawkish. Those voices may be louder in 2025.

The Federal Reserve is sounds 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 set to gain voting power in January could lead the Fed further in the direction of fewer rate cuts.

The change in policymakers could reinforce a more cautious direction outlined by the Fed on Wednesday even as he broke the rates for his third consecutive meeting. Fed officials took advantage of the brakes on future expectations by reduce their projected cuts next year to two from fourmainly due to the stickiness of inflation.

The 2025 reshuffle among policymakers is happening because of how the central bank splits votes on its Federal Open Market Committee, a 12-person body that has the final say on whether rates rise or fall.

Each January, four of the 12 seats on that committee change hands because of a power-sharing agreement the Fed has in Washington with the 12 semi-public regional Fed banks located 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 a little 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 Chairman Jerome Powell) and the president of the New York Fed, who always has a permanent seat.

Leaving 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 will not 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 peak 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 end up settling,” Schmid said last month while noting that the Fed is still on track for lower rates this year.

Those comments came after the president of the Kansas City Fed said back in October that he believed interest rates could settle “well above” the levels seen in the decade before the pandemic – a period of extremely 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 rate setting.

Although the St Louis Fed president said he expected inflation to reach 2% and that lowering rates over time would make sense, he also noted that it was important to keep the Fed's options open.

“The time may be approaching to consider slowing the reductions in interest rates, or delay, 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 two cuts, down from the previous estimate of four.

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

Fed officials now see inflation as measured by their preferred gauge – the “core” Personal Consumption Expenditure index – finishing next year at a higher 2.5%, up from a previous estimate of 2.2%. The Fed aims to get inflation to 2%.

“The slower pace of cuts for next year really reflects the higher inflation readings we've had this year and the expectation that inflation will be higher,” Powell said at 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 imposing tariffs when he takes office next year.

With inflation still above the Fed's target, policy uncertainty could create further warning for rate cuts.

Powell said some members of the Fed took a very preliminary step to start incorporating “very tentative estimates of the economic effects of policies into their forecast” at Wednesday's meeting.

That suggests that some policy makers had accounted for potential changes in regulation, immigration, trade and tax policy under the new Trump administration.

EY chief economist Greg Daco said that while he expects inflation to moderate early next year, that could change if deregulation, potential immigration restrictions, and tariffs lead to renewed inflationary stimulus.

“We expect that policymakers at the Fed will slow down the recalibration process in 2025 … and steer risks alongside inflation,” he said.

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