Federal Reserve officials in September largely agreed to cut US interest rates further this year, although they were divided on how much, minutes released from last month's meeting showed.
Fed officials were in near unanimity in deciding to cut interest rates by 25 basis points last month, bringing their target range down to 4-4.25 per cent. The Fed at the time gave signs of a softening labour market as its reason to cut rates.
However, minutes released on Wednesday showed some division within their ranks on how much further to cut them by later this year. Updated projections released last month showed the median Fed official expects to bring rates down to 3.6 per cent by the end of the year.
“Around half expected an additional cut at the October meeting,” the minutes read. “The vast majority of survey respondents expected at least two 25 basis point cuts by year-end, with around half expecting three cuts over that time.”
Minutes showed that most Fed officials feared risks to employment – one side of their dual mandate – had increased since their previous meeting in July. Meanwhile, most officials judged “upside risks to inflation had either diminished or not increased”.
Meanwhile, “a few participants” noted there was a case for keeping the US federal funds rate unchanged in September, or could have supported such a decision.
Traders anticipate the Fed to lower its benchmark interest rate range to 3.50-3.75 per cent by the end of the year, according to CME Group data.
Although Fed minutes are typically retrospective, this week's release was expected to draw greater attention because of the US government shutdown. Several federal services have been halted, including the work of agencies whose economic reports are closely monitored by the Fed as it assesses monetary policy decisions.
The Bureau of Labour Statistics did not release September's jobs report last Friday. If the government shutdown stretches through next week, the Fed could also be without a key inflation report.
A separate survey from the New York Fed released on Tuesday showed US consumers' views on the labour market further weakened while they raised their expectations for short and long-term inflation.
