Most members of the Federal Reserve’s interest-rate setting committee supported further reductions to its key interest rate this year, minutes from last month’s meeting, released Wednesday, showed.
A majority of Fed officials felt that the risk that unemployment would rise had worsened since their previous meeting in July, while the risk of rising inflation “had either diminished or not increased,” the minutes said.
As a result, the central bank decided at its Sept. 16-17 meeting to reduce its key rate by a quarter-point, its first cut this year, to about 4.1%.
Rate cuts by the Fed can lower borrowing costs, over time, for things like mortgages, auto loans, and business loans, encouraging more spending, growth and hiring.
Still, the minutes underscored the deep division on the 19-person committee between those who feel that the Fed’s short-term rate is too high and weighing on the economy, and those who point to persistent inflation that remains above the central bank’s 2% target as evidence that the Fed needs to be cautious about reducing rates.
Only one official formally dissented from the quarter-point cut: Stephen Miran, who was appointed by President Trump and was approved by the Senate just hours before the meeting began.
But the minutes said that “a few” policymakers said they could have supported keeping rates unchanged, or said that “there was merit” in such a step.
The details underscored Chair Jerome Powell’s statements during the news conference that followed the meeting: “There are no risk-free paths now. It’s not incredibly obvious what to do.”
The minutes provide insight into how the 19 members of the Fed’s interest rate-setting committee were thinking last month about inflation, interest rates, and hiring. Since then, however, the federal government shutdown has cut off the flow of economic data that the Fed relies on to inform its decisions.
The September jobs report wasn’t issued as scheduled last Friday, and if the shutdown continues, it could also delay the release of the inflation report set for next Wednesday.
This story originally appeared on NYPost
