Fed minutes show divisions; lone dissent sought bigger cut as majority eyes further easing
Fed minutes show a clear split: a majority backed further rate cuts after the Sept. 16–17 meeting (when the Fed trimmed rates 25 bps), while newly confirmed Governor Stephen Miran was the lone dissenter who had preferred a 50‑bp cut. Officials warned of rising job risks and easing inflation since July but also voiced caution—some argued progress on inflation has stalled excluding tariff effects, flagged AI’s potential to dent labor demand and noted loose financial conditions—while analysts say more easing is likely later this year though a December move will depend on incoming data.
Finance
Economy
📌 Key Facts
- The FOMC cut the policy rate 25 basis points on Sept. 16–17 — the Fed’s first cut since December 2024.
- The minutes show divisions: a few officials said they could have supported holding rates unchanged and warned that inflation progress has “stalled,” even when excluding 2025 tariff effects.
- Only one official dissented: newly confirmed Governor Stephen Miran, who was confirmed hours before the meeting and favored a 50 bp cut; Miran said falling rents should pull inflation down and that higher tariff revenues could reduce the deficit and long‑term rates, giving the Fed more room to cut.
- A majority of participants saw rising labor‑market risks and a diminished inflation threat since July, which underpins views favoring further easing.
- Several participants flagged that adoption of artificial intelligence could reduce labor demand, a development cited as part of the Fed’s rationale for easing.
- Some officials noted that financial conditions — including record‑high equities — suggest policy may not be particularly restrictive, supporting a cautious approach to additional moves.
- Officials warned inflation expectations could become unanchored if inflation doesn’t return to 2% in a timely manner; at the same time, regional Fed leaders urged caution—Kansas City Fed President Jeffrey Schmid said “inflation is too high” and Chicago Fed President Austan Goolsbee warned against “front‑loading” cuts without clearer evidence of cooling inflation.
- Outside analysts (EY‑Parthenon’s Gregory Daco; Capital Economics’ Stephen Brown) expect additional easing later this year but say the Fed could slow or skip a December cut depending on incoming data.
📰 Sources (3)
Federal Reserve officials remain cautious on future rate cuts
New information:
- FOMC cut the policy rate 25 bps on Sept. 16–17 — the first cut since December 2024.
- Only one official dissented: newly confirmed Governor Stephen Miran, who favored a 50 bps cut; he was confirmed hours before the meeting.
- Minutes note 'a few' policymakers could have supported holding rates unchanged or saw merit in doing so.
- Majority saw rising labor‑market risks and diminished inflation threat since July.
- Kansas City Fed President Jeffrey Schmid said 'inflation is too high' and argued for keeping rates high enough to cool demand.
- Chicago Fed’s Austan Goolsbee backed a cautious approach and warned against 'front‑loading' cuts without more evidence of cooling inflation.
- Analysts (EY‑Parthenon’s Gregory Daco; Capital Economics’ Stephen Brown) say additional easing is likely later this year but the Fed could slow or skip a December cut depending on data.
- Miran’s public remarks: falling rents should pull inflation down; higher tariff revenues could reduce the deficit and long‑term rates, giving the Fed more room to cut.
Fed minutes show some officials cautious about recent rate cut
New information:
- Minutes note a few officials wanted to hold rates steady despite the September cut and warned inflation progress has 'stalled' even excluding 2025 tariff effects.
- Several participants flagged that adoption of artificial intelligence could reduce labor demand, contributing to the Fed’s rationale for easing.
- Some officials said financial conditions — including record-high equities — suggest policy may not be particularly restrictive, arguing for a cautious approach to future moves.
- Officials warned inflation expectations could become unanchored if inflation doesn’t return to 2% in a timely manner.