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The Federal Reserve’s September meeting minutes revealed a cautious but clear inclination among policymakers to begin lowering interest rates further this year, though concerns over persistent inflation continue to temper the pace of any policy shift.

“Most judged that it likely would be appropriate to ease policy further over the remainder of this year,” the minutes of the Sept. 16–17 Federal Open Market Committee (FOMC) meeting stated.

However, officials also noted that “a majority of participants emphasized upside risks to their outlooks for inflation,” underscoring the delicate balance the central bank faces between supporting growth and curbing price pressures.

Fed divided on pace and scale of rate cuts

At the meeting, officials voted 11–1 to reduce the federal funds rate by a quarter percentage point, bringing the target range to 4% to 4.25% — the first cut this year.

Newly appointed Governor Stephen Miran dissented, favoring a more aggressive half-point reduction.

Updated projections released after the meeting signaled two more quarter-point cuts by year’s end, but also highlighted divisions within the committee.

Of the 19 participants, six anticipated either one or no additional cuts in 2025, suggesting disagreement about how quickly to ease policy amid lingering inflation concerns.

The minutes also revealed hesitation among some policymakers.

“A few participants stated there was merit in keeping the federal funds rate unchanged at this meeting or that they could have supported such a decision,” the document noted.

While officials acknowledged that risks to the labor market had increased, they agreed that recent data did not show a “sharp deterioration in labor market conditions.”

The FOMC emphasized maintaining a balanced approach as it weighed risks to both inflation and employment.

Labor market and inflation still central to policy debate

Since the September meeting, several Fed governors — including Vice Chairs Philip Jefferson and Michelle Bowman — have voiced concern that ongoing labor market strength could justify further rate reductions to maintain economic momentum.

Stephen Miran, appointed earlier this year and seen as closely aligned with the Trump administration’s economic outlook, has argued that the “neutral rate” — the level of interest that neither stimulates nor restricts the economy — may be lower than the Fed currently estimates.

As a result, he supports faster and deeper rate cuts to prevent real borrowing costs from rising too high.

Market expectations appear to align with the view of gradual easing.

Federal funds futures indicate investors expect cuts in both October and December.

However, Fed officials continue to stress a data-dependent approach amid uncertainty heightened by the ongoing government shutdown, which has disrupted the release of key economic indicators.

Markets weigh Fed uncertainty amid political backdrop

Markets showed little immediate reaction to the release of the FOMC minutes, even as political uncertainty loomed large.

The ongoing US government shutdown has muted economic data flows, with jobless claims figures unlikely to be published this week.

Joshua Mahony, Chief Market Analyst at Scope Markets, noted that the central bank faces an increasingly divided policy landscape.

“We have seen some of the heat come out of the market after the early record highs seen in the Nasdaq yesterday,” Mahony said, referencing Fed official Neel Kashkari’s warning that rapid rate cuts could reignite inflation.

“Nonetheless, Trump’s man in the Fed cared little for that kind of cautious tone, with Stephen Miran instead calling for a whopping five cuts over the course of next year,” Mahony added.

With the Fed’s internal disagreements deepening — and speculation mounting that President Donald Trump could appoint a new chair by May — investors are preparing for a policy path in 2026 that remains far from settled.

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