This was revealed in the minutes of the September decision A “large majority” voted in favor of a 50 basis point rate cut to the target range of 4.75% – 5.00%, mostly because it would raise interest rates to “Better alignment with recent inflation and labor market indicators.
It may have helped that “some participants” actually found a “reasonable case” for a 25 basis point rate cut at the July meeting.
The minutes also showed that “almost all participants” saw the upside risks to inflation as having diminished, while the downside risks to employment had increased.
But the decision to reduce by 50 basis points was not very popular, as the minutes indicated “Some participants” preferred a rate cut of 25 basis points “A few others” would have supported the move as well.
However, members consider it “important to convey” this move”It should not be seen as a sign of a more negative economic outlook“ Or as an indication that “The pace of policy easing will be faster than participants’ assessments of the appropriate course“.
Link to the official September 2024 FOMC meeting minutes
Fed members also reject any predetermined pathStressing that the additional amendments to the target scope are “Conditional on incoming data, evolving expectations, and the balance of risks.“
Market reactions
US dollar against major currencies: 5 minutes
Overlay of the US dollar against major currencies Chart by TradingView
The US dollar rose on fading expectations of a rate cut from the Federal Reserve and some profit-taking ahead of the US CPI reports. But when FOMC minutes revealed that a “large majority” favored a 50 basis point rate cut, the dollar briefly fell.
It didn’t take long for the US dollar to rebound, although the rest of the minutes showed that (a) there was support for a smaller cut, (b) the larger cut was not related to economic concerns, and (c) the Fed is not committed to any course of action. Predefined.
The dollar continued its early gains in the US session, although it gave up some of those gains with minor declines towards the end of the day.