WASHINGTON (AP) – Federal Reserve officials were sharply split last month when they decided to lower their key interest rate for the second time this year. The discussion at the September meeting, published Wednesday, showed that the majority of the Fed Officials considered a cut in the second quarter to be appropriate in the face of growing economic uncertainty due to trade tensions and a slowing global economy.
However, some participants said they advocated a reduction by half a point. They said the stronger rate cut would reduce the risk of a potential recession.
However, a third group of "multiple participants" argued that the Fed should not lower interest rates at all, as the current outlook for the economy has hardly changed since the last central bank meeting.
This rare tripartite split in the Fed's top policy panel suggests that Fed Chairman Jerome Powell may face difficulties in reaching consensus on future interest rate moves.
Many investors hope the Fed will cut interest rates for the third time this year, when it meets again at the end of this month. The Fed rate is currently in a range of 1
The CME group, which tracks futures trading using the Fed's Fed rate, is currently betting on the chance of a third cut in October of 84%.
Chris Rupkey, chief financial economist at MUFG, a global finance group, said, "We'd bet Powell will deliver the third cut that markets expect on October 30th. But more interest rate cuts will look less like those from Powell mentioned cuts in insurance style.
Michael Pearce, senior US economist at Capital Economics, said he had cut the "noticeably ambivalent" minutes on the timing of the next one, saying many Fed officials may be approaching the limit to which they can conveniently lower key interest rates in the face of trade uncertainty, and would prefer to "wait instead for more concrete signs of weakness in incoming data."
The key interest rate cut in September Following a cut in July, the first in a decade, she was accepted at 7: 3., Two Fed officials, Esther George, President of the Kansas City Regional Bank of the Fed, and others Eric Rosengren, president of the Boston Bank, rejects a non-cut.
James Bullard, president of the St. Louis Regional Bank, who disagreed in the other direction, arguing that the threats to the economy were big enough to make a stronger one Reduction required.
However, the protocol showed that there were other Fed officials who disagreed in the quarter, lowering key rates, though not strong enough to argue.
According to custom, the Fed does not cite the officials cited in the minutes who were released after a usual three-week delay after a meeting.
The logs showed officials also discussed the turmoil in a short-term funding market, the so-called repo market, which occurred during the week in which the central bank came together.
In this week's remarks, Powell has announced that the Fed will take steps to deal with these turmoil ulence.
The protocol showed that one of the options discussed would be to rebuild the Fed's balance sheet. The Fed had reduced its holdings, which had risen to a high of $ 4.5 trillion following the Great Recession as it conducted several rounds of bond purchases to lower long-term interest rates and boost the economy.
Bond purchases were termed "quantitative easing". Powell said that various options would be considered to give more stability to short-term funding markets, but that efforts should not be seen as a new round of quantitative easing.