According to minutes from the September 16-17 Federal Open Market Committee meeting, most Federal Reserve officials “felt that it would probably be appropriate to further ease monetary policy for the remainder of the year.” The minutes of the meeting also showed that “the majority of participants highlighted the upside risks to their inflation outlook.” Officials at that meeting voted 11 to 1 to cut interest rates by a quarter of a percentage point to a range of 4% to 4.25%, the first such cut this year.
The meeting
One official, newly appointed Stephen Miran, supported a half-percentage-point reduction and voted against the decision. The minutes show that a small number of officials were reluctant to support the rate cut.
“Some attendees said it was appropriate to keep the federal funds rate unchanged at this meeting or that they could support that decision.”
you can read it in the minutes. There have been divisions over whether two or three total reductions should be made this year, including the quarter-percentage-point reduction approved at the Sept. 16-17 meeting. A slight 10-9 majority supported cuts equivalent to a quarter of a point at each of this year’s two remaining meetings.
The Fed survey
The Committee’s sentiment coincided with a survey that the Fed sends to primary dealers in financial markets, the report said.
“Nearly all Desk survey respondents expected a 25 basis point cut in the target range for the federal funds rate at this meeting, and about half expected an additional cut at the October meeting. The vast majority of respondents expected at least two 25 basis point cuts by the end of the year, while about half expected three cuts over the same period.”
it is stated in the minutes.
While policymakers noted the increased risks to the labor market, many also viewed a rapid decline in employment as unlikely.
“Participants generally assessed that recent readings of these indicators did not show a clear deterioration in labor market conditions.”
Focus on work
Since their September meeting, Fed governors, including Vice Chairs Philip Jefferson and Michelle Bowman, have expressed concern about the strength of the labor market as a reason to lower interest rates. Miran argued that a lower-than-expected neutral interest rate implies the need for the Fed to cut rates quickly. Officials reiterated that they would weigh risks to both inflation and employment as they weigh their next move.
“Participants highlighted the importance of taking a balanced approach in promoting the committee’s employment and inflation objectives”
it is stated in the minutes.
