On Wednesday, the Federal Reserve reduced the benchmark lending rate by another quarter-point to a range between 3.75% and 4%.
The cut brought the key rate to its lowest level in the past three years. Two officials dissented, with Fed Governor Stephen Miran calling for a more substantial half-point cut, and Kansas City Fed President Jeffrey Schmid preferring to keep rates unchanged.
The meeting marked the first time since 2019 that there were dueling dissents, highlighting disagreements over rate policy among the central bank’s decision-makers. The meeting also marked the first time in recent history that officials set policy while lacking a month’s worth of government employment data.
In September, the Fed indicated there would likely be three total cuts this year; however, post-meeting statements from the latest gathering did not shed light on the Committee’s plans for December. For his part, Fed Chair Jerome Powell cautioned against assuming a third cut was all but certain next month.
“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Powell said during his post-meeting news conference, per CNBC. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”
Powell also stated that there is “a growing chorus” among Fed officials to at least hold off another cycle before enacting further rate reductions. Traders responded to the insight by lowering odds for a December rate cut from 90% down to 67%, according to the CME Group’s FedWatch.
“Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated,” read an October 29 press release from the Federal Reserve.
The statement reiterated the central bank’s desire to maximize employment and maintain a 2% inflation rate “over the longer run.”
“Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”