Fed Minutes Signal Support for Further Rate Cuts Despite Inflation Worries

Highlights:

• Federal Reserve officials indicated that additional rate cuts could be suitable later this year, following their September decision to lower the benchmark rate by 25 basis points to a range of 4.00%–4.25%.
• Despite supporting easing, a majority expressed concern over persistent inflation risks, with some preferring to maintain current rates longer.
• Committee projections revealed division—six of 19 members expect one or no additional cuts in 2025, underscoring uncertainty over the Fed’s future policy path.

Most Officials Lean Toward Easing

At the time of writing, minutes from the Federal Open Market Committee’s September 16–17 meeting revealed that most Federal Reserve officials supported additional interest rate reductions later this year. The committee had already approved a 25 basis point cut, bringing rates to 4.00–4.25%, in an 11-1 vote.

Caution Over Inflation Persists

Despite the tilt toward easing, the minutes showed that a majority of participants flagged upside inflation risks. Some voices on the committee remained cautious, emphasizing that inflation exceeding expectations could complicate future cuts. A few officials even suggested that retaining the current rate level might be defensible under certain circumstances.

Diverging Views on Cut Pace

New projections accompanying the minutes showed a median expectation of two additional quarter-point cuts through year-end. However, the committee is not united—six of the 19 participants anticipated one or no cuts in 2025, revealing a split over how aggressively to ease monetary policy.

The minutes offer a window into the delicate balancing act ahead: calibrating stimulus to support growth without reigniting inflation pressures.

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