Fed Minutes Show Officials Cautious Over Rate Cuts

Monetary Policy Stance - The Federal Reserve's minutes from its September 16th to 17th meeting revealed that almost all participants supported a 0.25% (quarter point) cut at the meeting [1] - A few participants believed there was merit in keeping the federal funds rate unchanged [2] - Most participants judged that it would likely be appropriate to ease policy further over the course of the year [5] - Financial conditions suggested monetary policy may not be particularly restrictive, suggesting a cautious path ahead [5] Economic Outlook & Concerns - Hawks noted progress towards the Fed's 2% inflation target had stalled, raising the risks of inflation expectations rising [3] - Officials indicated their outlooks for the labor market were uncertain and they viewed downside risks to employment as having increased [4] - Indicators cited included low hiring and firing rates, concentrated job gains in a small number of sectors, and increases in unemployment for groups traditionally sensitive to a weakening economy [4] - Economists are pointing to inflation figures and suggesting the worst of the tariff passed through into inflation and prices is yet to come [7] - Others are still concerned about the weakening of the labor market and the idea that that suggests a weakening of the economy ahead [7] Balance Sheet Considerations - Market participants are suggesting that reserves are at the borderline for whether or not there's enough available [10] - A 0.01% (one basis point) jump in the effective Fed funds rate recently was seen by some as a sign that this is coming [10] - Participants felt reserves continued to appear abundant, and no changes were suggested [5][11]