FOMC Minutes Signal Possible Further Rate Cuts Amid Rising Employment Risks

02:37 PM EDT, 10/08/2025 (MT Newswires) -- Most Federal Open Market Committee members were open to additional interest-rate reductions at the Sept. 16-17 FOMC meeting, citing a shift in the balance of risk toward weaker employment data, though they also urged caution, according to minutes released Wednesday.

At the meeting, the FOMC lowered the federal funds rate by 25 basis points to a range of 4% to 4.25%.

"Participants expressed a range of views about the degree to which the current stance of monetary policy was restrictive and about the likely future path of policy," the minutes said. "Most judged that it likely would be appropriate to ease policy further over the remainder of this year. Some participants noted that, by several measures, financial conditions suggested that monetary policy may not be particularly restrictive, which they judged as warranting a cautious approach in the consideration of future policy changes."

The updated Summary of Economic Projections released at the meeting indicated two additional rate cuts in 2025, compared with only one in the previous SEP. One cut is projected for 2026 and another for 2027.

While the FOMC's post-meeting statement noted rising risks to employment, the SEP revisions suggested slightly lower unemployment over the next two years, along with higher inflation and GDP growth expectations.

Newly appointed Fed Governor Stephen Miran dissented at the meeting, favoring a 50-basis point rate cut. Since then, he has suggested that rates should be at least a full percentage point lower, anticipating a slowdown in inflation next year.

Some committee members expressed concern that the full impact of recent tariff increases has yet to materialize and may emerge in the coming year.

"Some participants noted that business contacts had indicated that they would raise prices over time because of higher input costs stemming from tariff increases," the minutes said. "Uncertainty remained about the inflation effects of this year's increase in tariffs, though most participants expected these effects to be realized by the end of next year."

As a result, participants "stressed the importance of taking a balanced approach in promoting the Committee's employment and inflation goals, taking into account the extent of departures from those goals and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with the Committee's mandate."

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