According to the minutes published on Wednesday, the Federal Reserve plans two additional key rate cuts by the end of the year. Chairman Jerome Powell and most board members fully support this decision.
The only remaining debate is whether to cut twice or three times. The meeting on September 16–17 ended with a vote of 11 to 1 in favor of lowering the rate by 0.25 percentage points. This brought the target range down to 4–4.25% and paved the way for further easing as early as October and December.
The minutes state:
“Given the reduction of the target range at this meeting, almost all participants noted that the Committee is well positioned to respond quickly to economic events if necessary.”
Another excerpt says:
“Participants expressed differing views on how tight the current policy remains and what its future course will be. Most believe it is appropriate to continue easing through the end of the year.”
Opinions split, and Miran, as expected, voted against
The September meeting showed that there is no unity within the Fed regarding future policy. Of the 19 participants, including 12 voters, only 10 people supported the idea of two rate cuts by year-end. The rest hold a different view. The published forecasts also mention one cut in 2026 and another in 2027. After that, the rate will likely settle at around 3%.
This meeting was the first for the new board member — Steve Miran, who was sworn in just a few hours before the discussions began. He immediately went against the majority, advocating for a half-point cut instead of the approved quarter. His dissenting opinion was recorded in the final statement.
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Later, Miran noted that he was the only one who advocated for a more aggressive easing compared to the others.
While Miran insisted on deeper easing, others suggested a more cautious approach. The minutes note:
“Some participants indicated that by several measures, current financial conditions do not appear particularly tight, which in their view requires restraint when considering future policy changes.”
Weakness in the labor market, tariffs, and the threat of a shutdown
The main topic of discussion was the labor market. Fed representatives noted its weakening, while inflation risks either remained unchanged or declined. The minutes state:
“Participants generally noted that their rate decision at this meeting was related to a shift in the balance of risks. In particular, most concluded that the target rate range should be brought closer to neutral, as risks to employment increased between meetings, while inflation risks either decreased or remained the same.”
They also discussed Donald Trump’s tariff policy. Committee members believe that the imposed tariffs did affect price growth this year, but will not cause sustained inflation. This opens the way for new rate cuts — without fear of a long-term price spike.
A survey among major Fed dealers confirmed this position. The minutes note:
“Almost all survey participants expected a 25 basis point rate cut at this meeting, about half expected another cut in October. The vast majority forecast at least two cuts by year-end, about half — as many as three.”
One basis point is 0.01%, so 25 points is a 0.25% cut.
Another factor of uncertainty was the possible shutdown. The closure of the Department of Labor and the Department of Commerce deprives the Fed of access to fresh statistics on inflation, unemployment, and consumer spending.
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The minutes state directly that if by the October 28–29 meeting the government remains closed, the Board will be left without the necessary information to make decisions.
Despite this, the markets are unequivocal. According to the CME FedWatch Tool, the probability of two rate cuts by year-end is almost 100%.
