Washington — WASHINGTON (AP) — Most members of the Federal Reserve’s interest rate-setting committee supported further cuts to its key interest rate this year, according to a new report. minutes From last month’s meeting was released on Wednesday.
The meeting minutes said a majority of Fed officials felt the risk of higher unemployment had worsened since their previous meeting in July, while the risk of higher inflation had “either diminished or not increased.” As a result, the central bank It was decided at its meeting on September 16 and 17 To cut the key interest rate by a quarter of a percentage point to about 4.1%, its first cut this year.
Lowering interest rates by the Fed could gradually lower borrowing costs for things like mortgages, auto loans and business loans, encouraging more spending and hiring.
However, the minutes highlighted the deep divide on the 19-person panel between those who feel the Fed’s short-term interest rate is too high and weighing on the economy, and those who point to persistent inflation that remains above the central bank’s 2% target as evidence that the Fed needs to be cautious about cutting interest rates.
Only one official officially dissented from the quarter-point cut: Stephen Meieran, who was appointed by President Donald Trump and It was approved by the Senate Just hours before the meeting started. He supported a larger, half-point cut instead.
But the minutes noted that “a small number” of policymakers said they could have supported keeping interest rates unchanged, or said there was “merit” in such a move.
The differences help explain Chairman Jerome Powell’s comments during the post-meeting press conference: “There are no risk-free paths now. It is not clear what to do.”
Meiran said in remarks Tuesday that he believes inflation will fall steadily toward the Fed’s 2% target, despite Trump’s tariffs, and as a result he doesn’t think the Fed’s interest rate needs to be nearly as high as it is. Rental costs are falling steadily and will lower inflation, he said, while tariff revenues will reduce the government’s budget deficit and lower long-term interest rates, giving the Fed more room to cut.
However, the minutes showed that many other Fed officials remain concerned about stubbornly high inflation rates. Jeffrey Schmid, head of the Fed’s Kansas City branch, said in a speech Monday that “inflation is too high,” and said the Fed should keep interest rates high enough to cool demand and prevent inflation from getting worse.
Austin Goolsbee, head of the Federal Reserve’s Chicago branch, said in an interview Friday with The Associated Press that he supports a cautious approach to further cuts, and wants to see evidence that inflation will decline further.
“I’m a little uneasy about front-loading rate cuts, assuming those spikes in inflation will go away,” he said.
The minutes provide insight into how Fed policymakers thought last month about inflation, interest rates and employment. But since then, there has been a federal government shutdown Cut off the flow of economic data Which the Federal Reserve relies on to make its decisions. The September jobs report was not released as scheduled last Friday, and if the shutdown continues, it could also delay the release of the inflation report scheduled for next Wednesday.