Fed Minutes Reveal a Deepening Divide

The latest minutes from the Federal Reserve’s October 28-29 meeting show widening disagreement among policymakers over the next steps for interest rates.

The committee delivered a 25-basis-point cut, bringing the policy range to 3.75-4.00%, but the minutes make clear that unity is fading.

Several officials argued that monetary policy remains restrictive even after October’s adjustment, pointing to tight financial conditions and a fragile economic backdrop. Others reached the opposite conclusion, noting firmer activity data, easing financial conditions, and short-term real rate estimates that imply policy may no longer be restrictive in practice. These contrasting assessments are now shaping an unmistakable split within the committee.

December Meeting: A Rare Open Question

The minutes state directly that officials held “strongly differing views” on the most appropriate decision for December. Some participants indicated that, if the outlook unfolds as projected, another cut could be justified. A sizeable group, however, pushed for holding rates steady through year-end, citing uncertainty surrounding inflation trends and early signals of a softer labor market.

October Vote Highlights Early Fractures

The October cut passed with a 10-2 vote, already hinting at tension within the committee. Those fractures are now more pronounced. With delayed labor-market and inflation data still to be released due to the government shutdown, visibility is limited. As a result, the December meeting stands out as one of the most unpredictable moments of the Fed’s year, with the path ahead defined as much by internal debate as by incoming data.

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