The Federal Reserve released minutes from its September meeting, revealing that while officials believe the risks of high inflation have diminished, they remain cautious about prematurely or excessively reducing policy restrictions.
Several participants expressed concerns that easing monetary policy too quickly could hinder progress in combating inflation. The minutes noted that the staff’s outlook for the economy remained “solid,” although growth projections for the second half of 2024 were revised downward due to weaker-than-expected labor market indicators.
Uncertainty about the long-term neutral interest rate level was cited by some participants as a complicating factor in assessing the appropriate extent of tightening. As a result, a gradual reduction in restrictions was deemed appropriate.
While the majority of officials supported a 50-basis point rate cut at the September meeting, some participants expressed a preference for a 25-basis point reduction. A few others indicated that they might support a smaller rate cut. However, all officials ultimately agreed on the need for a rate cut at the meeting.
The minutes also revealed that some participants believed there was a reasonable case for a 25-basis point rate cut at the July meeting, although the vast majority supported a larger reduction.
