(Finance) – Almost all participants in the last FOMC meeting, in which a 50 basis point interest rate cut was decided, believed that the risks to achieving employment and inflation objectives were “more or less in balance”. In light of the progress on inflation and the balance of risks, “all participants agreed that easing the monetary policy stance was appropriate“. This is what emerges from the Fed minutes of the meeting of 17 and 18 September.
However, the minutes showed a certain disagreement on the extent of the cut in the cost of money, even though in the end I am a member of the FOMC (Michelle Bowman) voted against because she would have preferred a 25 basis point cut.
One”substantial majority” of the participants has the reduction of 50 basis points was supported. These participants generally noted that such a recalibration of the monetary policy stance would begin to bring it into better alignment with recent inflation and labor market indicators. They also stressed that such a move would help support the strength of the economy and the labor market while continuing to drive progress on inflation and would reflect the balance of risks.
“Some” participants noted that there had been a plausible case for a 25-point rate cut based on previous meeting and that data in the interim period had provided further evidence that inflation was on a sustainable path towards 2 percent as the labor market continued to cool. However, noting that inflation was still somewhat high while economic growth remained solid and unemployment remained low, “some” participants noted that they would preported a reduction of 25 basis points of the target range at this meeting and “a few others” indicated that they might support that decision.
“Several” participants noted that a reduction of 25 basis points would be in line with a gradual path of policy normalization that would allow policy makers to assess the degree of policy tightening as the economy evolved. “Some” participants also added that a 25 basis point move could signal a more predictable path to normalization of policies. “Some” participants noted that at this meeting the overall path of policy normalization, rather than the specific extent of initial easing, would be more important in determining the degree of policy tightening.
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