New York /
The officials of the Federal Reserve They could not agree on a decision to cut interest rates by half a point last month, according to meeting minutes.
The document signaled support for a gradual pace of rate cuts in the future, but there were some divisions in the Federal Open Market Committee when the central bank embarked on its first easing cycle since 2020.
The September decision to reduce the interest rate to a range of 4.75 to 5 percent was not unanimous, and Michelle Bowman she became the first governor to dissent since 2005. She argued that a more “measured” quarter-point cut “would avoid unnecessarily stoking demand.”
The minutes show that some participants preferred a quarter-point cut, and “a few more” indicated they could support a measure of that size.
“Several participants noted that a reduction of 25 basis points would be in line with a gradual path of policy normalization that would give policymakers time to assess the degree of restriction as the economy evolved,” it states. in the minutes.
It would also indicate “a more predictable trajectory of policy normalization,” some said.
Officials who supported the half-point measure — which the minutes show had the support of a “substantial majority” — said it would “help sustain the strength of the economy and labor market, while continuing to promote progress on of inflation, and would reflect the balance of risks.” Many of those officials thought a quarter-point cut in July — when the Fed halted any moves — would have been “workable.”
The dot plot of Fed officials’ individual rate projections, released at last month’s meeting, shows that most saw another half-point cuts this year and more in 2025, when it was estimated that rates would fall to a range of 3.25 to 3.5 percent.
The document does not suggest support for another big rate cut, instead suggesting that bankers are inclined to gradually reduce rates to a “neutral” level that no longer slows growth.
“Participants anticipated that if the data came out as expected, with inflation sustainably falling to 2 percent and the economy near maximum employment, it would be appropriate to move toward a more neutral policy stance over time,” it reads.
Since the meeting, top Fed officials signal little urgency for another half-point cut at the next meeting in November, especially after an excellent jobs report for September.
That report calmed fears that the U.S. was heading toward a recession and increased the chances that the Fed would get inflation back to its 2 percent target with minimal job losses.
In interview with Financial Timesthe president of the New York Fed, John Williamssaid projections of smaller cuts in upcoming meetings are a “very good base case.”
The president Jerome Powell He also said that the Federal Open Market Committee “is in no rush to cut rates.”
The president of the Dallas Fed, Lorie Loganalso backed gradual cuts, citing “a significant risk that inflation could remain stuck above the 2 percent target.”
The Fed will meet again a few days after the US presidential election and then in mid-December.
The central bank will receive its final inflation report before the country votes.
Economists forecast that the annual inflation rate in the consumer price index fell to 2.3 percent last month, the lowest level since February 2021.
The inflation related to services has been more persistent, keeping the “underlying” measure, which eliminates the volatile components of food and energy, higher. That indicator is expected to have stabilized at 3.2 percent in September.
