Fed Members Disagreed About More Rate Cuts This Year

Minutes from the Federal Reserve’s September meeting show a committee wrestling with conflicting signals and struggling to reach consensus on which is more important: stubborn inflation or a weakening labor market.

Markets now see a 94% probability that the Fed will lower rates at its October meeting and an 80% chance of another cut in December

The Fed cut rates for the first time this year, and most members see more cuts coming, Nicole Goodkind and Janet H. Cho reported for Barron’s Daily.

Policymakers expressed concerns about inflation remaining above the Fed’s 2% goal for nearly five years. September’s cut was prompted by lackluster employment data, but agreeing on the path forward proved difficult.

Some officials argued a cautious approach is warranted, citing the economy’s strength, an exuberant stock market, and narrow credit spreads as reasons not to rush into additional cuts.

Others, including new governor Stephen Miran, have urged further easing.

As of three weeks ago, Fed officials were cautiously optimistic about more rate cuts this year—but much has changed since last month’s meeting. A government shutdown has delayed the September jobs report and could lead to mass layoffs of government workers.

President Donald Trump suggested Tuesday that furloughed federal employees might not be guaranteed back pay, further reducing their spending power.

Markets now see a 94% probability that the Fed will lower rates at its October meeting and an 80% chance of another cut in December, according to the CME FedWatch Tool.