Fed minutes reveal division over pace of rate cuts amid weak labor market

The minutes of the US Federal Reserve’s meeting, held on Sept. 16–17, revealed a split among members of the Federal Open Market Committee (FOMC) over the pace of interest rate cuts.

Some members argued for faster action to counter the slowdown in the labor market, while others preferred a more cautious approach to avoid reigniting inflationary pressures.

According to the minutes released on Oct. 8, members broadly agreed that the deterioration in labor market conditions had become more evident, though several noted that inflation risks had become more balanced—even as the rate remains above the 2% target.

Following the committee’s decision to cut rates by 25 basis points in September, nearly half of FOMC members anticipated two additional cuts by the end of 2025.

However, some participants warned that excessive easing could undermine the Fed’s credibility in fighting inflation. Others pointed out that persistent weakness in residential investment and a slowdown in consumer spending reflect a broader cooling in economic activity.

The minutes emphasized that the FOMC is not following a pre-set path and that future policy decisions will depend on incoming economic data, particularly labor market and inflation trends in the final quarter of the year.