Federal Reserve officials who voted to cut interest rates in September did so as a one-time safeguard against stubborn inflation, not as the start of a sustained campaign of increases, according to minutes from the central bank's September policy meeting released Wednesday.
The minutes showed broad agreement that the quarter-point cut was warranted "just in case" price pressures proved more persistent than expected, with officials describing the move as a recalibration rather than the beginning of a tightening cycle. Most participants said they did not see a case for raising rates repeatedly in the months ahead.
The September action lowered the federal funds rate to a target range of 4.00% to 4.25%, the first reduction since the Fed began easing in late 2024. The vote was not unanimous, with several officials preferring to hold rates steady until inflation showed clearer progress toward the Fed's 2% target.
The minutes land as investors weigh whether the Fed will move again at its October 28-29 meeting. Futures markets tracked by CME Group priced roughly a 90% probability of another quarter-point cut after the release, up slightly from before the minutes were published.
Officials flagged a split labor market as a central concern. Job growth has slowed sharply this year, with the Bureau of Labor Statistics reporting average monthly payroll gains of about 29,000 over the three months through August, down from roughly 160,000 a month in early 2024. The unemployment rate stood at 4.3% in August.
Inflation, meanwhile, has cooled but not fully. The personal consumption expenditures price index, the Fed's preferred gauge, rose 2.7% in August from a year earlier, above the central bank's 2% goal for a fourth straight month.
"Participants generally judged that the risks to their dual mandate had shifted toward the employment side," the minutes stated, referring to the Fed's twin goals of stable prices and maximum employment.
Several officials said the September cut should not be read as a signal that the Fed was on a preset path. The minutes noted that future decisions would depend on incoming data, with policymakers watching whether tariff-driven price increases fade or feed into broader inflation.
Fed Chair Jerome Powell said at his post-meeting press conference on September 17 that the cut was a "risk management" move, adding that the central bank was "not on any preset course." Powell has faced pressure from President Trump, who has publicly called for steeper cuts and floated replacing the Fed chair when Powell's term expires in May 2026.
The Fed's next policy statement is scheduled for October 29, followed by Powell's press conference at 2:30 p.m. Eastern.
