‘Fed megaphone": minutes from Fed meeting show divergence on rate cut in September

‘Fed megaphone’ Nick Timiraos said that at last month's meeting, Fed officials were split on the size of the rate cut, with the vast majority in favour of the bolder 50 bps cut that was ultimately approved, but others in favour of a smaller 25 bps cut. The just-released minutes unveiled a discussion about why officials chose to start the first rate cut since 2020 with a bolder 50 basis points. The decision to cut rates to a range of 4.75 per cent to 5 per cent was supported by 11 of the 12 members of the Fed's rate-setting committee. One policymaker opposed the decision in favour of a smaller cut. Supporters of a larger rate cut ‘generally believed that such a recalibration of the stance of monetary policy would begin to bring it into better alignment with recent inflation and labour market indicators’, the minutes said. Some of those officials argued that a 25 basis point cut was ‘justified’ at the last meeting in late July, and that recent data had only confirmed the case for a cut.