The FOMC Minutes from the latest decision-making meeting of the US Federal Reserve have just been published. Recall that on September 18 the Fed decided to cut rates by 50 basis points, which came as a surprise to the market, which mostly expected a cut of just 25 basis points. Here are the most important transcripts of the minutes of that event:
- While a "substantial majority" supported the 50 bps cut in the fed funds rate, several members believed 25 bps would have been more consistent with gradual normalization of the policy rate.
- Most participants see balanced risks to the inflation outlook. However, Michelle Bowman dissented, preferring 25 bps cut due to core inflation well above target
- Participants generally said it was important to communicate decisions are conditional on evolution of economy, implications for balance of risks and therefore not on a preset course.
- Economic activity expanding at "solid pace", job gains slowed, but unemployment remains low. Inflation made "further progress" but still "somewhat elevated"
- Members anticipate moving toward more neutral policy stance over time if data evolves as expected. Committee will "carefully assess" data for additional rate adjustments
- Several participants remarked reducing policy restraint too soon or too much could risk stalling or reversal of progress on inflation.
- FOMC members also discussed the importance of communicating quantitative tightening could continue for some time even as rates are reduced.
- Staff outlook for September meeting was for economy to remain solid, though forecast for growth in 2nd half of 2024 was marked down reflecting softer-than-expected labor indicators
- Almost all participants agreed upside risks to inflation had diminished. Some members noted there had been a plausible case for a 25 basis-point cut at the July meeting.
Source: xStation5
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