Fed officials were divided on whether to cut rates by half a point in September, minutes show
WASHINGTON – Federal Reserve officials at their September meeting agreed to cut interest rates but were unsure how aggressive to get, ultimately deciding on a half percentage point move in an effort to balance confidence on inflation with worries over the labor market, according to minutes released Wednesday.
The meeting summary detailed reasons that policymakers decided to approve a jumbo rate cut of 50 basis points for the first time in more than four years and showed members divided over the economic outlook.
Some officials hoped for a smaller, quarter percentage point cut as they sought assurance that inflation was moving sustainably lower and were less worried about the jobs picture.
Ultimately, only one Federal Open Market Committee member, Governor Michelle Bowman, voted against the half-point cut, saying she would have preferred a quarter point. But the minutes indicated that others also favored a smaller move. It was the first time a governor had dissented on an interest rate vote since 2005 for a Fed known for its unity on monetary policy.
«Some participants observed that they would have preferred a 25 basis point reduction of the target range at this meeting, and a few others indicated that they could have supported such a decision,» the minutes stated.
«Several participants noted that a 25 basis point reduction would be in line with a gradual path of policy normalization that would allow policymakers time to assess the degree of policy restrictiveness as the economy evolved,» the document added. «A few participants also added that a 25 basis point move could signal a more predictable path of policy normalization.»
Since the meeting, economic indicators have showed that the labor market is perhaps stronger
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