Fed policymakers deeply divided on whether to cut rates, minutes show
WASHINGTON: Federal Reserve policymakers were deeply divided over whether to cut interest rates last month but were united in wanting to signal they were not on a preset path to more cuts, a message not likely to sit well with US President Donald Trump.
Minutes from the two-day meeting released on Wednesday showed policymakers' ultimate decision to lower the central bank's benchmark interest rate by a quarter percentage point drew more opposition than was reflected in the rate-setting panel's 8-2 vote, announced after the meeting adjourned on July 31.
While a "couple" of participants favoured a deeper cut of half a percentage point to help lift inflation toward the Fed's target and thwart fallout from global trade tensions, a larger number - characterised in the minutes as "several" - favoured no change at all.
The depth of the debate raises the stakes for the signal that Chairman Jerome Powell is set to deliver today at the Fed's annual policy retreat in Jackson Hole, Wyoming. It also shows a Federal Reserve not eager to give Mr Trump the larger rate reductions he is demanding.
"I think the thing that surprised me was how divided they were," said Ms Mary Ann Hurley, vice-president for fixed income trading at D.A. Davidson in Seattle. "We're really in uncharted territory. They are really concerned about doing or not doing the right thing."
The divisions revealed in the minutes indicate there might have been more dissents if all participants had a vote. While Fed board governors are permanent voters, only five of the 12 regional reserve bank presidents have a vote at each meeting. - REUTERS