There is a cloud of doubt on whether the US Federal Reserve will reduce key interest rates in its next meeting this December.
To recall, the Federal Open Market Committee (FOMC), the decision making body of the Fed, agreed during its October meeting that a rate reduction is in order.
“Several participants assessed that a further lowering of the target range for the federal funds rate could well be appropriate in December if the economy evolved about as they expected over the coming intermeeting period,” the minutes noted.
“Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year,” it added.
However, after US Fed’s decision to cut the policy rate in the last meeting last October, Chairman Jerome Powell told reporters that a December cut was not a “foregone conclusion.”
The FOMC decided to make a 25 basis point (bps) cut in the policy rate to a range of 3.75 percent to 4 percent in its October meeting. However, the vote was 10-2, showing some disagreements among Fed officials.
Among the concerns raised was a slowing job market and inflation that has “shown little sign of returning sustainably” to the Fed’s 2-percent, according to the minutes.
“Against this backdrop, many participants were in favor of lowering the target range for the federal funds rate at this meeting, some supported such a decision but could have also supported maintaining the level of the target range, and several were against lowering the target range,” it said.
The minutes showed that “one participant,” Stephen Miran, preferred a half-point cut. Also, Jeffrey Schmid voted against the 25 bps reduction, instead preferring not to cut at all.
The Fed’s Minutes also showed that during the 43-day government shutdown, a lack of government data made decision-making more difficult, as reports on the job market, inflation, and several other measures were not gathered or made public.
ANADOLU PHOTO