Fed Minutes Show ‘Many’ Officials Lean Against December Cut
Many Federal Reserve officials said it would likely be appropriate to keep interest rates steady for the remainder of 2025, according to minutes of the Federal Open Market Committee’s October 28-29 meeting.
The record of the meeting, released Wednesday in Washington, also showed “several” policymakers were against lowering the Fed’s benchmark rate at that gathering.
“Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year,” the minutes said.
Still, several participants said another cut in December “could well be appropriate in December if the economy evolved about as they expected” before the next meeting.
The minutes underscored the uncertainty around the likelihood of a cut next month given ongoing divisions on the committee over whether inflation or unemployment represents a greater threat to the US economy.
A majority of the panel’s voters agreed at the meeting to lower interest rates by a quarter percentage point for a second straight time, though two officials dissented. Governor Stephen Miran, President Trump’s recent appointee, voted to cut rates by a half-point. Kansas City Fed President Jeff Schmid favored holding rates steady.
During his press conference following the meeting, Fed Chair Jerome Powell surprised investors by cautioning that another cut in December was “not a forgone conclusion.”
In the three weeks that followed, Fed officials who are more worried about inflation and less inclined to lower rates again in December have dominated the public discussion over the path ahead for monetary policy.
Investors have lowered expectations for a cut in December to about 30%, according to pricing in federal funds futures.
Balance Sheet Debate
The minutes also showed that “almost all participants” thought it appropriate to halt the runoff of securities from the Fed’s balance sheet on Dec. 1, or could support that decision. Officials have been shrinking the balance sheet since mid-2022 and decided at the October meeting to end that process next month.
Some market participants have worried the Fed is waiting too long to stop the runoff, allowing liquidity pressures to create volatility in overnight funding rates.
Source :Bloomberg.com
