- Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year.
- Most participants judged that further downward adjustments would likely be appropriate over time to move toward a neutral stance.
- Several participants assessed a Dec cut would be appropriate if economy evolved as they expected
Downside risks to employment have risen in recent months, while job gains have slowed
Inflation has moved up since earlier in the year and remains "somewhat elevated," with upside risks still present
Almost all participants agreed to end balance sheet runoff (QT) on December 1 as reserves approach "ample" levels
Participants noted a "divergence" in consumer spending: High-income households are supported by equity gains, while lower-income groups are pulling back
Tariffs are expected to put upward pressure on inflation in 2025 and 2026 according to staff projections
Staff economic outlook sees GDP growth remaining above potential until 2028, though uncertainty remains elevated.
Some participants commented on stretched asset valuations in financial markets, with several of these participants highlighting the possibility of a disorderly fall in equity prices
Reminder, the Fed cut to 3.75-4.00% at this meeting and Stephen Miran wanted a larger 50 bps cut; Jeffrey Schmid wanted no cut at all.
This is a notable line:
"Many participants expected some additional pickup in core goods inflation over the next few quarters, driven in part by further pass-through of tariffs to firms' pricing."
Another notable line:
many participants were in favor of lowering the target range for the federal funds rate at this meeting, some supported such a decision but could have also supported maintaining the level of the target range, and several were against lowering the target range
Very important for December:
Several participants assessed that a further lowering of the target range for the federal funds rate could well be appropriate in December if the economy evolved about as they expected over the coming intermeeting period. Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year.
