The Federal Reserve's December 2025 meeting minutes reveal concerns over tightening short-term funding markets, despite stable interest rate expectations. Released on December 30, the minutes highlight that while the economic backdrop was broadly comfortable, officials noted signs of stress in overnight borrowing markets. Reserves in the banking system had fallen to 'ample' levels, but officials warned that small demand swings could elevate borrowing costs and strain liquidity. The minutes flagged elevated overnight repo rates and increased reliance on the Fed's standing repo operations as warning signs. Seasonal factors, such as end-of-year pressures and tax-related reserve drains, could exacerbate these issues. To mitigate risks, the Fed discussed purchasing short-term Treasury securities to maintain ample reserves, with expected purchases totaling $220 billion in the first year. Additionally, officials considered enhancing the Fed's standing repo facility to ensure market stability. The next FOMC meeting is set for January 27-28, 2026, with traders largely expecting rates to remain steady.