Minutes from the Fed’s most recent policy committee meeting indicate that members are sharply divided on how to move forward, making a rate cut in December less likely.
At the October 29 FOMC meeting, Federal Reserve Chair Jerome Powell warned investors against expecting an interest rate cut in December, emphasizing that it is “not a foregone conclusion” and noting the strong, differing opinions among Committee members about the next steps.
Here are some key highlights from the Minutes.
1. Interest Rates
The Committee decided to lower the target range for the federal funds rate by 25bps to 3.75% to 4%. It was the second time in 2025 when the US Fed had lowered the interest rates. Markets are expecting another rate cut in 2025 in light of the weakness in the job market. However, with inflation not yet under control, the consensus is far from emerging.
2. Members Call
Members of the October FOMC meeting noted that economic activity was expanding moderately, with job gains slowing and a slight increase in the unemployment rate, though it remained low through August.
Members observed consistency in recent indicators, noting that inflation has risen and remains elevated. They agreed that the Committee is aware of the risks related to its dual mandate, with increased downside risks to employment in recent months.
3. Voting Pattern
In support of the Committee’s goals and in light of the shift in the balance of risks, almost all members decided to lower the target range for the federal funds rate by 0.25 percentage point to 3.75 to 4 percent.
Two members voted against that decision. One of these members preferred to lower the target range by half a percentage point, while the other member preferred to leave the target range unchanged.
Almost all members agreed to conclude the reduction of the Committee’s securities holdings on December 1. One member who voted against the Committee’s policy rate decision at the meeting also preferred an immediate end to balance sheet runoff.
4. Voting Action
Voting in favour of a rate cut was exercised by Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller.
Voting against a rate cut was exercised by Stephen I. Miran, who preferred to lower the target range for the federal funds rate by ½ percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.
5. Going Forward
Members agreed to carefully assess incoming data, the evolving outlook, and the balance of risks when considering adjustments to the federal funds rate target range. All members affirmed their commitment to supporting maximum employment and returning inflation to the 2 percent objective.
Members agreed to monitor incoming information regarding the economic outlook and be ready to adjust monetary policy if risks arise that could hinder the Committee’s goals. Members agreed to consider various information for their assessments, including labor market conditions, inflation pressures and expectations, as well as financial and international developments.