Europe Asia News

Although the Federal Open Market Committee (FOMC) approved a rate cut at the meeting, the path forward remains uncertain. The disagreements carried over into the December outlook, with many officials expressing skepticism about the need for an additional cut widely expected by the markets. “Many” said no further cuts would be necessary at least until the end of 2025:

“Several participants judged that if the economy evolves as expected over the period leading up to the next meeting, a further reduction in the target range for the federal funds rate in December could be appropriate. Many participants, based on their economic outlooks, indicated it would be most appropriate to maintain the target range unchanged for the remainder of the year.”

In Fed terminology, “many” is more than “several,” indicating a tilt away from a December cut. However, “participants” does not necessarily refer to voting members. Nineteen individuals took part in the meeting, but only twelve voted, leaving uncertainty about the voting members’ stance.

This wording aligns with remarks made by Fed Chair Jerome Powell during the post-meeting press conference. Powell told reporters that a December cut is “not a foregone conclusion.”

Ultimately, the FOMC approved a quarter-point cut to the overnight borrowing rate, lowering it to a range of 3.75%–4%.

Officials broadly expressed concern about a cooling labor market and inflation that shows “no signs” of sustainably returning to the Fed’s 2% target.

“In this context, many participants supported lowering the target range; some supported the decision but could have supported keeping it unchanged; and a few opposed lowering the range,” the minutes stated.

The minutes also showed that the 44-day federal government shutdown complicated decision-making due to missing data. Reports on labor markets, inflation, and other indicators were not compiled or released during the impasse.

The minutes noted that the balance-sheet aspect of policy was also discussed. The FOMC agreed to stop reducing Treasury and mortgage-backed securities in December. The process, known as quantitative tightening, has removed more than $2.5 trillion from the balance sheet, which now stands at around $6.6 trillion.