WASHINGTON (Reuters) – Most Federal Reserve policymakers supported the need for an interest rate cut in September, minutes of the central bank’s last policy meeting showed, but they remain increasingly divided on the path ahead for monetary policy.
The readout of the meeting, released on Wednesday, also showed that the Fed agreed it would soon need to discuss whether to increase the size of its balance sheet following ructions in short-term money markets.
Fed - Policymakers - Sept - Meeting - Vote
Fed policymakers at the Sept. 17-18 meeting decided, in a 7-3 vote, to lower the benchmark overnight lending rate by a quarter percentage point to between 1.75% and 2%.
“Most participants believed that a reduction of 25 basis points in the target range for the federal funds rate would be appropriate,” the Fed said in the minutes.
Consensus - Risks - Trump - Administration - Trade
But that was where the consensus mostly ended. While all had generally become more concerned with risks associated with the Trump administration’s escalating trade wars, particularly with China, slowing global growth and other developments such as Brexit, they differed on what that meant for the U.S. economy.
Several policymakers felt it would be prudent for the Fed to cut rates now to guard against risks while several others said the current U.S. economic outlook did not justify a rate cut.
Uncertainties - Uncertainties - Expansion - Policy - Accommodation
“They contended that the key uncertainties were unlikely to be resolved soon. Furthermore, as they did not believe that these uncertainties would derail the expansion, they did not see further policy accommodation as needed at this time.”
Several policymakers noted that statistical models suggested the likelihood of a recession over the medium term had increased in recent months and a number warned that the labor market coming into 2019 may have been less strong than previously thought, according to Bureau of Labor Statistics preliminary revisions.
Fed - Borrowing - Costs - Year - Interest
The Fed has lowered borrowing costs twice this year after having raised interest...
Wake Up To Breaking News!