The Fed debated a bigger rate cut at its last meeting but wanted to avoid appearing like it was on a path to more rate cuts, 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 U.S. President Donald Trump.
While a “couple” of participants favored 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 - characterized in the minutes as “several” - favored no change at all. 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.
However, Fed policymakers agreed at their July 30-31 meeting that they did not want to give the impression they were planning more rate cuts. Minneapolis Federal Reserve Bank President Neel Kashkari, who does not have a vote on the Fed’s monetary policy committee this year but participates in policy discussions, urged the Fed on Wednesday to use pledges about future policy, known in central banking as “forward guidance,” to boost the economy.
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