Fed Leans Toward December Rate Pause, Minutes Show -- Bar

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Dow Jones NewsNov 19, 7:46 PM UTC
DJ Fed Leans Toward December Rate Pause, Minutes Show -- Barrons.com

By Nicole Goodkind

 

Many Federal Reserve officials said it would likely be appropriate to keep interest rates steady for the rest of year, though they expressed concerns over a weakening labor market at their latest policy meeting.

 

Minutes from the central bank's Oct. 28-29 meeting show a committee wrestling with conflicting economic signals and struggling to reach consensus on which is the most pressing issue -- stubborn inflation or a labor market showing signs of distress. Officials lowered interest rates for the second time this year by a quarter percentage point to between 3.75% and 4.00% at last month's meeting of the Federal Open Market Committee.

 

In the minutes, the majority of officials agreed that an October rate cut was necessary in light of recent lackluster employment data. It was the path forward that created disagreements.

 

In the minutes, the majority of officials agreed that an October rate cut was necessary in light of recent lackluster employment data. It was the path forward that created disagreements.

 

Many participants "suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year," read the meeting notes, released Wednesday afternoon.

 

In Fed speak, "many" typically trumps "several," indicating that a slight majority of Fed officials thought pausing would be appropriate in December. Still, it should be noted that not all of those participants are voting members.

 

Meanwhile, several policymakers "assessed that a further lowering of the target range for the federal-funds rate could well be appropriate in December if the economy evolved about as they expected over the coming intermeeting period," according to the minutes.

 

Still, all participants said they agreed that "that monetary policy was not on a preset course and would be informed by a wide range of incoming data, the evolving economic outlook, and the balance of risks."

 

Fed officials also acknowledged that cutting interest rates further could risk a miscommunication around their commitment to lowering inflation to its 2% goal.

 

Many participants, "remarked that overall inflation had been above target for some time and had shown little sign of returning sustainably to the 2 percent objective in a timely manner," according to the minutes.

 

The latest official consumer price index reading, for September, showed that inflation is at its highest since January and has remained above the Fed's 2% goal for nearly five years.

 

The minutes, wrote Joseph Brusuelas of RSM "provided unmistakable evidence of a split between hawks and doves with text implying a slight tilt towards the hawks that made a persuasive point around the risk of higher inflation becoming entrenched."

 

Of course, the economic backdrop has changed since October. The government shutdown has ended, and key data releases, including employment and inflation, are expected to resume eventually.

 

On Wednesday, the Department of Labor said it wouldn't release the October unemployment rate, and that it would delay the release of October and November payrolls data to Dec. 16, after the final Fed meeting of the year.

 

That delay, said Brusuelas, "means the fog of uncertainty for the Fed will have only partially eased. Under such conditions the Fed will not and should not cut rates."

 

Investors are now pricing in a 31.6% chance of a rate cut at the December meeting, down from 50.1% a day ago, according to the CME FedWatch tool.

 

Fed officials also issued a warning about artificial intelligence investments. Several participants highlighted "the possibility of a disorderly fall in equity prices, especially in the event of an abrupt reassessment of the possibilities of AI-related technology," the minutes read.

 

Write to Nicole Goodkind at [e-mail]

 

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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November 19, 2025 14:46 ET (19:46 GMT)

 
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