A few Federal Reserve officials were reluctant to support the central bank’s interest rate cut in September, minutes from the Fed’s latest meeting showed, emphasizing the extent of the divisions that have emerged between policymakers over what to do about borrowing costs.
The record of the September meeting, when policymakers lowered interest rates by a quarter of a percentage point, underscored the tough balancing act ahead for the Fed as it contends with both a softening labor market and higher inflation. The decision, which shifted interest rates to a new range of 4 to 4.25 percent, was officially supported by every Fed official except one. It was the Fed’s first rate cut this year.
Stephen Miran, who was sworn in just ahead of the start of the two-day meeting, voted instead for a more aggressive, half-point reduction. Mr. Miran, who was most recently a top economic adviser to President Trump, also stood apart from his new colleagues in projections released by the Fed.
He signaled the need for borrowing costs to fall roughly two percentage points lower than current levels. Most officials penciled in an additional half-point reduction this year, which would bring interest rates down to 3.5 to 3.75 percent. However, seven of the 19 policymakers who submitted forecasts indicated that they did not see a need to cut further this year, while two predicted just one more quarter-point move.
The minutes show the range of views that Jerome H. Powell, the chair, is now having to manage.
“A few participants stated there was merit in keeping the federal funds rate unchanged at this meeting or that they could have supported such a decision,” the minutes said. “These participants noted that progress toward the committee’s 2 percent inflation objective had stalled this year as inflation readings increased and expressed concern that longer-term inflation expectations may rise if inflation does not return to its objective in a timely manner.”
The decision to cut in September centered on a shift in how officials viewed the risks confronting the economy. For most of the year, they had been focused chiefly on inflation, which has been above the Fed’s 2 percent target for roughly five years. Mr. Trump’s tariffs have helped push certain consumer prices higher, but the overall impact on inflation has been more muted than once expected.
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The post Mixed Economic Signals Stoke Divisions at Fed, Minutes Show appeared first on New York Times.
