The minutes of the Federal Open Market Committee (FOMC) meeting on September 17 and September 18 released by the Federal Reserve pointed out:
Rate cut decision and support:
The vast majority of participants supported the Federal Reserve's decision in September to lower the target range of the federal funds rate by 50 basis points, bringing its benchmark funds rate to a range of 4.75%-5%. Eleven of the 12 voting members of the Federal Open Market Committee voted in favor of the decision, and only one voted against, supporting a rate cut of only 25 basis points. However, the differences between officials are greater than the voting figures show.
Views on economic risks:
Inflation risk: Almost all participants agreed that the upside risk of inflation has weakened, but the inflation rate is still slightly higher.
Employment risk: Most participants said that the downside risk of employment has increased.
Views on policy restrictiveness: Several participants pointed out that premature or excessive reduction of policy restrictiveness could lead to stagnation or reversal of progress in fighting inflation.
Views on different interest rate cuts: - Officials who support a 50 basis point rate cut believe that this adjustment can better align the monetary policy stance with the latest inflation and labor market data, and there was a reasonable reason to cut interest rates at the July meeting, and recent data has consolidated the rationality of the rate cut.
Officials who believe that a 25 basis point rate cut is more reasonable emphasize that the unexpected rate cut pattern is inconsistent with the Fed's intention to gradually reduce the policy rate, and the economic data itself only supports rate cuts, not super-standard rate cuts. Smaller rate cuts can make the path of monetary policy normalization more predictable and give policymakers more time to assess economic progress.
Expectations for future policy stance:
If inflation continues to decline toward the Fed's 2% policy target and employment maintains its recent expansionary trend, a more neutral stance may be appropriate over time. In general, this meeting minutes shows that there are major differences among Fed officials on issues related to interest rate cuts, and the future direction of monetary policy remains uncertain
