Fed Minutes Signal More Rate Cuts Likely in 2025
September FOMC meeting summary shows 'around half' of officials expect two additional rate cuts by year-end amid a softening labor market.
The Federal Reserve has signaled a strong inclination to lower borrowing costs further this year, according to newly released minutes from its September meeting. The summary revealed that foresaw another two interest rate cuts by the end of 2025, a move that has bolstered investor sentiment and sparked a bullish reaction in US markets.
The detailed account of the September 16-17 meeting, which included a 25-basis-point rate cut, provides critical insight into the central bank's thinking. The committee's closely watched 'dot plot' of rate projections indicated that signaled support for an extra pair of rate reductions in 2025. This consensus for a more dovish monetary policy comes as officials weigh the risks of a cooling economy.
The primary driver behind the anticipated easing is a softening labor market and the view that risks to inflation have diminished. The stated that most officials expressed increased concern about the downside risks to employment. This pivot suggests the Fed is shifting its focus toward sustaining economic growth. The signal of cheaper capital ahead has been welcomed by Wall Street, with market expectations now largely aligning with the Fed's projected path for at least two more cuts before the year is over.