Fed Minutes Show Options Are Open on Interest Rate Cuts

When Federal Reserve officials cut interest rates at a meeting this month, they avoided clearly hinting at what might come next, minutes from the gathering show.The account of the central bank’s Nov.6-7 meeting, released on Tuesday, offered few signals about whether Fed officials would be likely to cut interest rates at their gathering in December, or about how much they would be likely to lower them in 2025.Fed officials raised rates in 2022 and 2023 to make borrowing more expensive, with a goal of slowing the economy and wrestling rapid inflation under control.Because inflation has been cooling notably since peaking in 2022 and the job market has been showing signs of slowing, officials began to cut rates in September, and then made a second rate cut in November.

The goal was to ease off the brakes, allowing the economy to slow gently without risking a painful crash.When Fed officials last released economic forecasts in September, policymakers expected to make one final quarter-point rate cut in 2024.But in recent months, economic data have been stronger than economists had expected.And the job market, which had been showing signs of cooling, has stabilized.Given that, some economists have been wondering if the Fed could pause rate cuts at its coming meeting.

The minutes from its November gathering offered little clear guidance, saying only that “it would likely be appropriate” for rates to move “gradually” lower over time.When it comes to inflation, the minutes said that Fed officials “remained confident that inflation was moving sustainably toward 2 percent, although a couple noted the possibility that the process could take longer than previously expected.”And in regard to the labor market, officials thought that risks had abated somewhat.“Some participants still saw elevated risks that the labor market could deteriorate, though many participants saw the risk of an excessive cooling in the labor market as having diminished somewhat since the c...