Fed’s October rate decision fueled pushback over possible December cut

Divisions over whether the Federal Reserve should cut interest rates next month deepened at officials’ October meeting, leaving a growing contingent—and potentially a narrow majority—of policymakers uncomfortable with a December rate reduction.

- Nick Timiraos

Fed officials at the last meeting had "strongly differing views" over whether to pause or cut rate next month.

(REUTERS)

“Participants expressed strongly differing views about what policy decision would most likely be appropriate at the committee's December meeting,” according to a written record of the meeting released Wednesday afternoon with the customary three-week lag.

The Fed voted 10-2 to cut rates by a quarter point last month to a range between 3.75% and 4%. But the minutes showed that several officials—probably presidents of Fed banks who participated but don’t have a vote on the rate-setting body—opposed last month’s decision to lower rates. Moreover, other officials who backed the rate cut would have also supported taking no action, according to the minutes.

The minutes showed a committee as divided as any has been in years over what to do at its next gathering. The tersely written account said that “many” officials thought a rate cut wouldn't be warranted in December—a group that outnumbered the “several” that thought a reduction “could well be appropriate.”

Beyond the next meeting, the minutes said most officials thought further rate reductions would be warranted.

The Fed’s rate-setting committee includes seven presidentially appointed governors and a rotating cast of five out of 12 Fed presidents, all of whom participate in the meeting.