Only one interest rate cut is expected next year. lizabeth Frantz/ReutersOnly one interest rate cut is expected next year. lizabeth Frantz/ReutersMinutes of latest Federal Reserve meeting reveal deep divide over interest ratesIn an unusual turn, the central bank’s board debated over monetary policy before the latest quarter-point cutThe US Federal Reserve agreed to cut interest rates at its December meeting only after a deeply nuanced debate about the risks facing the US economy right now, according to minutes of the latest two-day session. Even some of those who supported the rate cut acknowledged “the decision was finely balanced or that they could have supported keeping the target range unchanged”, given the different risks facing the US economy, according to the minutes released on Tuesday. In economic projections released after the 9-10 December meeting, six officials outright opposed a cut and two of that group dissented as voting members of the Federal Open Market Committee. Fed cuts interest rates by a quarter point amid apparent split over US economyRead more“Most participants” ultimately supported a cut, with “some” arguing that it was an appropriate forward-looking strategy “that would help stabilize the labor market” after a recent slowdown in job creation. Others, however, “expressed concern that progress towards the committee’s 2% inflation objective had stalled”.“Some participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for some time after a lowering of the range at this meeting,” the minutes said of a debate that saw officials dissent both in favor of tighter and looser monetary policy, an unusual outcome for the central bank that has now happened at two consecutive meetings. The quarter-point rate cut approved in December lowered the Fed’s benchmark overnight interest rate to a range of between 3.5% to 3.75%, the third consecutive move by the central bank as officials agreed that a slowdown in monthly job creation and rising unemployment warranted slightly less restrictive monetary policy. But as rates fell, and approached a neutral level that neither discourages nor encourages investment and spending, opinion at the Fed became more divided about just how much more to cut.
