Fed Meeting Minutes Will Reveal the Direction of Interest Rate Cuts Amid the Ongoing Government Shutdown
The minutes of the United States Federal Reserve's (Fed) monetary policy meeting on September 16-17 will be released on Wednesday at 6:00 PM GMT. The US central bank decided to cut its benchmark interest rate by 25 basis points (bps) to a range of 4%-4.25% at this meeting, but Fed Governor Stephen Miran preferred to cut the benchmark rate by 50 bps.
Jerome Powell and co. decided to cut the benchmark interest rate in September
The Federal Open Market Committee (FOMC) decided to cut the interest rate by 25 bps in September, in line with widely anticipated. In the policy statement, the Fed acknowledged that employment growth had slowed and reiterated that inflation remained "moderately elevated."
The revised Summary of Economic Projections (SEP), released alongside the policy statement, suggests an additional 50 bps rate cut by the end of the year, followed by 25 bps in 2026 and 2027.
In the post-meeting press conference, Fed Chair Jerome Powell explained that they do not see the need to move quickly on interest rates, while adding that risks to the employment mandate have increased. "New data suggest there are significant downside risks to the labor market; that is widely accepted," Powell said. Regarding the inflation outlook, he noted that rising prices due to tariffs could raise inflation, but added that they expect such an increase to be a one-off event.
TD Securities analysts believe that the FOMC Minutes will highlight the split on the Committee between hawks and doves. "Most participants likely considered policy recalibration necessary. However, we estimate some participants considered further easing this year unlikely given tariff-driven inflation risks. Many participants likely anticipated further easing due to labor market risks," they added. (alg)
Source: FXstreet
