Fed Minutes Expose Quiet Divide Over How Far to Cut Rates
The Federal Reserve’s latest minutes paint a clear picture of a central bank ready to loosen policy but unsure how fast to move.
While nearly every policymaker backed the idea of lowering borrowing costs to cushion a cooling labor market, their debate centered on how much relief the economy actually needs.
By mid-September, the Federal Open Market Committee had already trimmed rates by a quarter point, settling the benchmark range between 4% and 4.25%. What followed in the closed-door discussions was less about whether to cut again and more about how often. Some officials favored two more moves this year, others argued for three, revealing how finely balanced the consensus has become.
The published summary captured this tension: most participants believed monetary policy remained tight and that additional easing was justified. Yet a few voices cautioned that markets might already be adapting to easier conditions, suggesting the Fed should move more carefully to avoid reigniting inflationary pressures.
Newly appointed Governor Stephen Miran, attending his first meeting, emerged as the only dissenter. His view was that the situation warranted a bolder response – a half-point reduction rather than the modest step the committee approved. Public remarks he made afterward confirmed his preference for a faster path of cuts, one that stood out even on the Fed’s internal “dot plot” of projections.
That projection chart exposed a razor-thin majority leaning toward two more reductions in 2025, with the rest arguing for an additional move. Beyond that, the longer-term outlook showed the policy rate drifting gradually toward a neutral level of around 3% over the next two years.
Market participants had anticipated this trajectory well before the meeting. A Fed survey of primary dealers revealed that almost everyone expected a 25-basis-point trim in September, while roughly half were betting on at least one more by October.
The tone of the minutes suggests that the central bank is preparing to act swiftly if the economy falters further – but without committing to a fixed path. The Fed, for now, appears to be walking a tightrope: determined to keep growth alive, but wary of cutting too deep, too soon.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
