The Federal Reserve looks divided but only by degrees. The latest FOMC minutes released Wednesday show one clear theme: the Fed is firmly on the path to cutting, though not everyone agrees on how fast or how far.
After last month’s quarter-point trim, officials broadly agreed that more easing is needed as the labor market cools and inflation drifts closer to target. The debate wasn’t about whether to cut again, it was about how many times before the year ends.
Here’s what you need to know:
1. A Split Committee But a Clear Direction
During their September meeting, the Federal Open Market Committee expressed openness to further rate cuts this year, minutes show.
“Most judged that it likely would be appropriate to ease policy further over the remainder of this year,” the Sept. 16-17 meeting minutes say.
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7:32 PM • Oct 8, 2025
Almost all Fed members backed the September rate cut, taking the federal funds rate to 4.00–4.25%, with an 11–1 vote in favor. The lone dissenter, newly appointed Governor Stephen Miran, wanted a bigger 0.50% cut, arguing that the economy needs a stronger jolt.
The rest of the committee leaned toward two more 25-basis-point cuts before year-end, which would bring rates closer to neutral. Some even projected mild easing into 2026–2027, setting a long-term rate around 3%.
It’s clear the Fed wants flexibility, not a fixed plan. As the minutes put it, officials are “well positioned to respond in a timely way” depending on how the economy unfolds.
2. Labor Market Weakness Takes the Spotlight
The turning point was jobs data or rather, the lack of it. With the government shutdown delaying key reports, policymakers are worried about flying blind ahead of the October and December meetings.
Still, early signals point to a softening labor market. ADP data showed slower hiring, and officials noted “downside risks to employment have increased.” Inflation, meanwhile, is seen easing, meaning the balance of risks now favors keeping the economy afloat.
3. The Inflation Story Is Changing
Interestingly, the Fed no longer sees tariffs, especially Trump’s latest rounds, as a long-term inflation threat. Most officials believe the price impact will fade quickly, removing one of the main reasons for past hawkishness.
That gives them even more room to ease without fearing a new inflation spike.
My Takeaway
The Fed might be split on the pace, but not the direction. Rate cuts are coming and markets know it. What stands out is how fragile their confidence looks without data.
If the shutdown drags on, October’s decision could be one of the most uncertain FOMC meetings we’ve seen in years. For us traders, that means one thing: volatility is about to make a comeback.