Lead: Federal Reserve minutes from the October 28–29 meeting show officials were sharply divided over the quarter-point rate cut approved that week and uncertain about another cut in December. The FOMC voted 10–2 to lower the federal funds rate to 3.75%–4.00%, but the minutes record competing views on whether a cooling labor market or persistent inflation poses the greater risk. Market odds for a December reduction fell to roughly one-in-three after the release, while many participants signaled no further cuts may be needed in 2025.
Key Takeaways
- The FOMC approved a 25 basis-point cut on Oct. 29, bringing the target range to 3.75%–4.00%, with a 10–2 vote.
- Minutes show deep divisions: some saw policy as still restrictive, others said it was weighing on growth and labor.
- Language indicates more participants opposed an immediate December cut than supported it—”many” suggested holding rates for the rest of 2025.
- Market pricing shifted: CME Group FedWatch put December odds near 33% and January odds near 66% after the minutes.
- One participant (identified as Stephen Miran) preferred a 50 bps cut; two participants dissented—one by voting no and another preferring no cut at all.
- The committee agreed to pause further balance-sheet runoff in December; quantitative tightening had already reduced assets by about $2.5 trillion, leaving the balance sheet around $6.6 trillion.
- The 44-day federal government shutdown disrupted the release of some economic data, complicating policymakers’ near-term assessments.
Background
The October meeting took place against a backdrop of slowing labor-market indicators and inflation that has not yet convincingly returned to the Fed’s 2% goal. Policymakers have been walking a narrow path between supporting employment and anchoring inflation expectations after a prolonged period of elevated prices. In recent months the Fed shifted from rapid tightening to a more gradual approach as inflationary pressures eased but remained sticky in some measures.
Committee composition and voting rights add nuance to the minutes: 19 participants attended the meeting but only 12 are voting members at any given year, so participant-level views do not map directly onto the board’s final votes. Public statements from several governors and regional presidents ahead of and after the meeting highlighted the range of views, from those urging more accommodation to those pushing to maintain restraint until inflation is demonstrably on track.
Main Event
At the end of the October session the Federal Open Market Committee approved a 25 basis-point reduction in the federal funds rate by a 10–2 margin. The minutes reveal the decision was the product of intense debate: some participants favored the cut to guard against an apparent slowdown in the labor market, while others warned that premature easing could jeopardize reaching the 2% inflation target.
Discussion extended to the December meeting. The minutes note that “several participants” thought a December cut could be appropriate if incoming data followed their baseline, but “many participants” said under their outlooks it would be appropriate to keep rates unchanged for the remainder of the year. In Fed usage, that distinction signals a tilt away from an additional near-term cut.
Participants also differed on whether current policy was materially restrictive. A subset argued that even after the quarter-point reduction policy remained restrictive and could be relaxed further; others pointed to resilient economic activity as evidence policy was still tightened. One participant, identified in the minutes, preferred a larger 50 basis-point cut, while at least one regional president voted against cutting at all.
Committee members flagged data gaps caused by a 44-day federal government shutdown, which delayed or disrupted releases from agencies such as the Bureau of Labor Statistics and the Bureau of Economic Analysis. Officials debated how much the missing reports constrained their near-term judgments—some likened decision-making to “driving in the fog,” a comparison Fed Chair Jerome Powell used publicly, though not all members agreed with that analogy.
Analysis & Implications
The split underscored by the minutes complicates market expectations and the Fed’s communication challenge. When a central bank signals division, markets often recalibrate probabilities for future moves, which we saw in the rapid decline in December cut odds. That repricing can itself affect financial conditions, feeding back into the economic outlook and the Fed’s calculus.
Policy makers now face a trade-off: easing further could shore up labor conditions but risks undermining progress on inflation; standing pat could bring price gains down further but increase near-term stress in goods and labor markets. The plurality view that no further cuts may be necessary in 2025 reduces the likelihood of a rapid easing cycle, barring materially weaker data.
Internationally, a less dovish Fed trajectory would keep U.S. rates relatively higher, supporting the dollar and potentially increasing borrowing costs in emerging markets. Conversely, a decisive move to cut in December would likely lower Treasury yields and ease financing conditions worldwide. The balance-sheet decision to halt runoff in December signals an easing of another restrictive tool, even if rate decisions remain contested.
Comparison & Data
| Item | Before Oct. meeting | After Oct. meeting |
|---|---|---|
| Federal funds target range | 4.00%–4.25% | 3.75%–4.00% |
| FOMC vote | — | 10–2 (cut) |
| Balance sheet reduction to date | — | ~$2.5 trillion run-off; assets ~ $6.6 trillion |
| CME Dec. cut odds (post-minutes) | ~high probability | ~33% |
The table illustrates the immediate policy changes and market reaction. The pause in quantitative tightening offsets some tightening from the policy rate, creating a mixed policy stance. Analysts will watch incoming employment and inflation releases—especially those delayed by the shutdown—to see whether the Fed’s majority view holds.
Reactions & Quotes
“A December cut is not a foregone conclusion,”
Jerome Powell, Federal Reserve Chair (post-meeting briefing)
Powell’s comment framed the minutes and helped explain why markets stepped back from pricing a near-certain December move. He reiterated the central bank’s data-dependent approach and cautioned against assuming future cuts.
“We have enough information to make policy decisions,”
Christopher Waller, Governor (public remarks)
Waller’s statement contrasts with the “driving in the fog” characterization, reflecting the heterogeneity inside the committee over how much missing government data matters for immediate policy choices.
“Markets have already lowered the odds for December; attention now shifts to January,”
Market analyst, CME Group pricing desk
Traders rapidly updated futures pricing after the minutes, shifting the likely timing of the next easing step into early 2026 unless new data alter the outlook.
Unconfirmed
- Whether the voting members who cast the 10–2 decision will maintain the same votes in December is not confirmed; minutes report participant views, not final 12-member votes for future meetings.
- Precise timing for the release of all delayed government data affected by the 44-day shutdown remains incomplete; some agency schedules were announced but gaps persist.
Bottom Line
The October minutes paint a Federal Reserve wrestling with conflicting signals: a labor market showing signs of cooling and inflation that remains stubborn. While the committee authorized a modest easing in late October, language in the minutes leans toward pausing further cuts through 2025 under many participants’ outlooks.
Markets have re-priced a lower chance of a December reduction, pushing potential easing into early 2026 unless incoming data materially weakens. Policymakers’ next moves will hinge on the delayed government statistics and fresh readings on jobs and prices; the Fed’s stated approach remains explicitly data-dependent.
Sources
- CNBC (news report summarizing FOMC minutes and market reaction, media)
- Federal Reserve (official FOMC minutes, official)
- CME Group — FedWatch (futures-based probability tool, market data)