Fed minutes: October 2025

Fed officials disagreed on lowering interest rates at their October meeting and were divided over whether a stagnant labor market or persistent inflation were the bigger economic threats, according to minutes released Wednesday.

While the Federal Open Market Committee approved the cut at its meeting, the path forward looks less certain. The disagreements extended to the December outlook; While officials expressed skepticism about the need for an additional cut, which markets widely expected, “many people” said further cuts were not needed, at least in 2025.

“Many participants considered that if the economy develops as they expect in the upcoming meeting period, it may be appropriate to further reduce the federal funds rate target range in December,” the minutes said. The statement was included. “Many participants suggested that, given their economic outlook, it would probably be appropriate to keep the target range unchanged for the remainder of the year.”

In the Fed’s parlance, “many” is more than “a few,” indicating a bias against a December rate cut. However, “participants” do not refer to voters. There were 19 attendees at the meeting but only 12 votes, so it’s unclear what the voting members’ stance would be on a move in December.

However, this note coincides with the statement made by Fed Chairman Jerome Powell at the post-meeting press conference. Powell told reporters that the December outage was not “a foregone conclusion.”

“While discussing the short-term course of monetary policy, participants expressed very different views on which policy decision would be most appropriate at the Committee’s December meeting,” the minutes said.

Before Powell’s statement, traders were almost certainly pricing in another move in the December 9-10 session. That chance had fallen to about 1 in 3 as of Wednesday afternoon, according to CME Group’s FedWatch futures pricing measure. The probability of a cut in January is around 66%.

The minutes stated that “most participants” viewed further cuts as likely in the future, if not in December.

As a result, the FOMC approved a quarter-point reduction in the overnight borrowing interest rate to the range of 3.75%-4%. But the 10-2 vote was not indicative of how divided officials are in an institution not generally known for its opposition.

Officials generally expressed concerns about a slowing labor market and inflation that “shows little sign of a sustainable return” to the Fed’s 2% target. The minutes reflected multiple camps within the committee.

“Against this backdrop, many participants at this meeting were in favor of lowering the federal funds rate target range, some supported such a decision but would also support maintaining the target range level, and many were against lowering the target range,” the minutes said.

At the heart of the debate was disagreement over how “restrictive” the current policy was for the economy. Some respondents thought the policy was still hindering growth despite the quarter-point cut, while others saw the “resilience of economic activity” as indicating the policy was not restrictive.

Judging by public statements, the board is divided among inflation doves, including Governors Stephen Miran, Christopher Waller and Michelle Bowman, who favor cuts as a way to address weakness in the job market. On the other side are Jeffrey Schmid from Kansas City, Susan Collins from Boston and St. There are more hawkish members like Alberto Musalem of St. Louis; They worry that further cuts could prevent the Fed from reaching its 2% inflation target.

There are also moderates who favor a patient approach, such as Powell, Vice President Philip Jefferson and New York President John Williams.

In the minutes, referring to Miran, it was noted that “one participant” preferred a more aggressive half-point deduction. Schmid also voted no, saying he preferred not to make any cuts at all.

Meeting minutes showed that decision-making was complicated by a lack of government data during the 44-day federal government shutdown. Reports on the labor market, inflation, and many other metrics were not compiled or published during this stalemate. Government agencies such as the Bureau of Labor Statistics and the Bureau of Economic Analysis have announced schedules for some releases, but not all.

Powell likened the situation to “driving in the fog,” but Waller rejected that comparison Monday and said the Fed had plenty of data to formulate policy.

The balance sheet aspect of the policy was also discussed in the minutes. The FOMC agreed in December to halt tapering of Treasuries and mortgage-backed securities; This process caused the balance sheet, currently around $6.6 trillion, to decrease by more than $2.5 trillion. There appears to be widespread approval to halt the process known as quantitative tightening.