Federal Reserve officials appeared largely united in their desire to cut interest rates during their September meeting, though they differed slightly on how many rate reductions should occur this year. According to minutes released on Wednesday, policymakers expressed a strong consensus that the central bank’s benchmark rate needed to be lowered due to ongoing weakness in the labor market.

The discussion revealed only minor disagreement—mainly over whether two or three rate cuts would be appropriate in total for 2025, including the quarter-point reduction approved at the Sept. 16–17 session.

The meeting summary stated that nearly all members of the Federal Open Market Committee (FOMC) believed the latest rate adjustment positioned the central bank well to react quickly to any new economic developments. However, the minutes also noted that officials held a range of opinions about how restrictive current policy remained and the path monetary policy should take going forward. Most participants agreed that further easing would likely be necessary before the end of the year.

A narrow divide among policymakers

Out of the 19 FOMC participants, 12 have voting rights. The committee voted 11–1 to approve the latest quarter-point cut, bringing the federal funds rate down to a target range of 4% to 4.25%. Still, the group was nearly split on how much additional easing should occur through the rest of 2025 and beyond.

Projection materials revealed that a slim 10–9 majority supported quarter-point cuts at each of the remaining meetings this year. Forecasts also indicated one additional reduction in both 2026 and 2027, after which rates would stabilize around 3% in the long term.

The meeting also marked the first participation of newly appointed Governor Stephen Miran, who joined just hours before the session began. Miran stood out as the lone dissenter, favoring a more aggressive half-point reduction. While the minutes did not identify individuals, the post-meeting statement confirmed his vote against the smaller cut.

In later public comments, Miran acknowledged that he represented the single “dot” on the Fed’s projection chart advocating for a steeper path of easing compared with his colleagues.

Labor market and inflation outlook

Despite overall agreement on the need to reduce rates, several officials preferred a more measured approach. Some pointed out that, by various indicators, financial conditions did not yet appear overly tight—suggesting that caution remained warranted before committing to further aggressive moves.

At the same time, policymakers expressed growing concern about the labor market, noting clear signs of weakening job growth and rising downside risks to employment. Even as inflation threats persisted, most members expected price pressures to continue easing toward the Fed’s 2% target.

The minutes reflected a shift in the committee’s risk assessment. Participants agreed that it was appropriate to bring policy closer to a neutral stance, as risks to employment had grown while inflation risks had either moderated or remained steady.

Tariffs also entered the discussion, with members generally concluding that President Donald Trump’s trade levies were unlikely to cause lasting inflationary effects, despite contributing to price increases earlier in the year.

Market expectations and data challenges

The Fed’s internal survey of major financial institutions mirrored the committee’s outlook. Nearly all respondents predicted a 25-basis-point cut at the September meeting, while about half anticipated another in October. Most expected at least two additional quarter-point reductions by the end of the year, with some projecting three.

(For reference, one basis point equals 0.01%, so a 25-basis-point change equals a quarter of a percentage point.)

Adding to the uncertainty, policymakers must now contend with the ongoing government shutdown. Key agencies such as the Labor and Commerce departments have temporarily halted operations, preventing the release of essential data on inflation, employment, and consumer activity.

If the shutdown continues into the FOMC’s next meeting on Oct. 28–29, officials may be forced to make rate decisions without access to crucial economic indicators. Market forecasts currently suggest a high probability that the Fed will deliver another rate cut in both October and December, though these moves could ultimately hinge on how quickly normal data reporting resumes.