Fed Minutes: Signals of Interest Rate Cuts Strengthening

Results of Fed's September Meeting

The Federal Reserve (Fed) has released the minutes from the policy meeting held by the Federal Open Market Committee (FOMC) on September 16-17. These minutes indicate that many officials believe a rate cut is necessary due to increasing risks in the labor market. However, concerns about inflation are causing many participants to adopt a more cautious approach.

Rate Cut Implemented

In September, the Fed lowered the policy interest rate by a quarter point to a range of 4.00-4.25%. The minutes emphasized that most participants assessed the increased downside risks to employment and deemed it appropriate to bring the federal funds rate to a more neutral level.

Cautious Approaches on Inflation

A large portion of the participants highlighted upward risks regarding the inflation outlook, pointing to inflation data exceeding the 2% target and uncertainties regarding the possible effects of tariffs. It is assessed that further easing of policies may likely be appropriate for the remainder of the year. However, the lack of consensus on timing and pace indicates differing views within the Fed.

Different Views Among Fed Members

During the meeting, some participants noted that the monetary policy might not be particularly restrictive, suggesting a more cautious approach to rate cuts. “A few participants” advocated for keeping the policy rate unchanged, while at the other end of the spectrum, one proposed a larger half-point cut.

What to Expect at the Next Meeting?

The latest projections show a nearly even split among 19 participants; nine anticipate two more cuts this year, while the remaining nine foresee only one or no additional cuts. Fed Chair Jerome Powell, in his statement after the meeting, noted that monetary policy remains clearly at a "restrictive level," but he refrained from committing to further rate cuts. The next significant meeting of the Fed is scheduled for October 28-29.