Fed minutes will show how divided policymakers are over next rate cut
The bank could be moving toward another interest-rate cut this year. It could also be finished easing for now.
The Federal Reserve could be moving toward another interest-rate cut this year. It could also be finished easing for now. Wednesday’s minutes will offer the first detailed look at how most policymakers viewed the path ahead during their October meeting.
The minutes, due at 2 p.m. Eastern, cover the Fed’s Oct. 28-29 gathering, where officials lowered rates by a quarter percentage point to a 3.75%–4.00% range and signaled a clear divide over whether additional easing would be appropriate by year-end.
Investors will be hoping that the official record of what happened those two days offers clues about whether the Fed sees room for further cuts or is preparing to pause. There is a case for either choice.
The latest official reading showed that inflation is at its highest since January and has remained above the Fed’s 2% goal for nearly five years. At the same time, the labor market is losing momentum and income-growth expectations have fallen. That leaves officials weighing two risks: cutting too little as the economy slows or cutting too much with inflation still elevated.
Recent commentary reflects that split. Vice Chair for Supervision Michelle Bowman and governors Stephen Miran and Christopher Waller have indicated support for more easing. Others, including St. Louis Fed President Alberto Musalem, Kansas City Fed President Jeffrey Schmid and Boston Fed President Susan Collins, have urged caution and signaled a likely pause at the Dec. 9-10 meeting.
In their latest projections of the economy’s performance, and what comes next for interest rates, published in September, 10 officials penciled in one more cut in December, while nine anticipated none.
The minutes will show how widespread the October disagreement was and where the majority stand heading into the final policy meeting of 2025. A clear division would show more internal turmoil around cuts than previously thought and could reinforce growing market expectations for a December hold.
Investors currently assign just a 51% probability to another cut, according to the CME FedWatch tool.
The meeting notes may also indicate whether the balance of risks has shifted. “In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December," Chair Jerome Powell said after the October meeting. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it."
Of course, the economic backdrop has changed since October. The government shutdown has ended, and key data releases, including employment and inflation, are expected to resume, potentially giving officials a clearer view before December.
Even so, Wednesday’s minutes offer a snapshot of the internal dynamics shaping Fed policy. They promise a rare look at just how unified, or not, officials were heading into the final stretch of the year.
Write to Nicole Goodkind at nicole.goodkind@barrons.com
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