Minutes of the meeting released Wednesday show that Federal Reserve officials were strongly inclined to lower interest rates in September, with the only dispute appearing to be how much to cut.
meeting summaryWi indicated there was near unanimity among participants in the Federal Open Market Committee that the central bank’s key overnight lending rate should be cut due to weakness in the labor market.
However, they are divided on whether there should be a total of two or three cuts this year, including a quarter percentage point move approved at the September 16-17 meeting.
“Considering the monetary policy outlook, nearly all participants noted that, with the reduction in the target range for the federal funds rate at this meeting, the Committee was well positioned to respond in a timely manner to potential economic developments,” the minutes said.
“Participants expressed a range of views about the extent to which the current stance of monetary policy was restrictive and about the potential future path of policy,” the document said. “The majority decided it would be appropriate to further ease the policy over the remainder of this year.”
one vote difference
Project material released at the meeting illustrated the close division among the 19 officials who attend FOMC meetings, 12 of whom vote.
While the full Federal Open Market Committee voted 11-1 to lower its benchmark interest rate by a quarter percentage point, participants had differing views on how aggressive they should be through the rest of 2025 and over the next several years. The cut brought the federal funds rate down to a target range of 4%-4.25%.
Ultimately, a slim majority of 10–9 supported the equivalent of quarter-point reductions at each of this year’s remaining two meetings. Projection materials indicated the possibility of another cut in both 2026 and 2027 before the funds rate stabilized in the long-term range around 3%.
However, a variety of viewpoints emerged at the meeting. The session of 16–17 September was the first session of newly appointed Governor Stephen Miron, who took office just hours before the start.
Miran identified himself as a lone voter who favored a far more aggressive easy path. Although the minutes do not identify individual participants, a post-meeting statement said Miran had expressed dissent, preferring instead a half-point deduction.
Furthermore, in a subsequent public appearance, Miran said that he was a lone “point of view” who indicated a far more aggressive path to easing than the rest of the committee members.
concerns over the labor market
The meeting saw a cross-section of views, some of which preferred a more cautious approach to the cuts.
The minutes said, “Some participants noted that, by many measures, financial conditions suggested that monetary policy could not be particularly restrictive, which they saw as requiring a cautious approach when considering future policy changes.”
Officials became concerned about the state of the labor market, which they saw as weakening as the threat of inflation continued to rise, although they still expected it to return to the Fed’s 2% target.
“Participants generally focused their judgments about the appropriate policy of this meeting
The action reflects a change in the balance of risks,” the minutes said. ”Specifically, most participants saw that it was appropriate to move the target range for the federal funds rate toward a more neutral setting because they judged that the downside risks to employment had increased over the medium term and the upside risks to inflation had either decreased or not increased.”
Tariffs were a key part of the discussion, with a general assumption that President Donald Trump’s levies would not be a major source of lasting inflation after rising prices this year.
The summary said the committee’s sentiment on rates matches a survey sent by the Fed to primary dealers in the financial markets.
“Almost all respondents to the desk survey expected a 25 basis point cut in the target range for the federal funds rate at this meeting, and nearly half expected an additional cut at the October meeting,” the minutes said. “Most survey respondents expected at least two 25 basis point cuts by the end of the year, while nearly half expected three cuts during that time.”
One basis point is equal to 0.01%, so a 25-basis-point move is equal to a quarter percentage point.
Policymakers now face a government shutdown, along with an unusual level of diversity of opinion. Data providers such as the Departments of Labor and Commerce have ceased operations while the standoff continues and are not releasing or collecting data.
Should the shutdown not end by the FOMC’s October 28-29 meeting, policymakers will essentially turn a blind eye to key economic metrics such as inflation, unemployment and consumer spending. Market pricing suggests near certainty that the Fed will cut both at the upcoming meeting and in December, but that decision could be influenced by a lack of data.
Correction: An earlier version misstated the market survey’s opinion as the opinion of Fed officials. A survey of market participants indicates that “about half” expect a total of three cuts this year.
