Federal Reserve Minutes Expose Sharp Divisions; Many Deem A December Cut Inappropriate And Some Fear Disorderly Equity Sell‑Off

The Minutes Indicate That At Last Month’s Monetary Policy Meeting, Federal Reserve Policymakers Were Deeply Split On A December Rate Cut. Those Arguing That No Further Cuts Are Needed This Year Did Not Reach A Majority But Outnumbered Supporters Of A Cut, While Some Centrists Said The Decision Hinges On Incoming Data. There Was Near‑Consensus To Halt Quantitative Tightening To Reduce The Balance Sheet, And Concerns Were Raised About The Risk Of A Disorderly Decline In Equities.

Released On Wednesday, November 19 (U.S. Eastern Time), The Minutes Stated That Participants Expressed Starkly Different Views On The Most Likely Decision At The December FOMC Meeting. Most Judged That As The Committee Gradually Shifts Toward A More Neutral Stance, Further Rate Reductions May Be Appropriate. However, Several Indicated They Did Not Necessarily See A 25‑Basis‑Point Cut In December As Suitable, While Several Assessed That A December Cut Could Be Appropriate If The Economy Evolves As Expected; Many Said Holding Rates Steady For The Remainder Of The Year May Be Appropriate.

All Participants Agreed That Policy Is Not Static And Will Be Shaped By Fresh Data, The Changing Economic Outlook, And The Balance Of Risks. Media Observed That “Many” In Fed Parlance Represents Fewer Than “Most” Or “Majority,” Indicating Those Opposing A December Cut Were Still A Minority. Nick Timiraos, A Veteran Fed Reporter Often Dubbed The “New Fed Wire,” Noted That “Many” Officials Viewed A December Cut As Unnecessary—Exceeding The “Several” Who Saw A Cut As Likely Appropriate—While Most Still Believed Rates Should Be Reduced Eventually, Whether Or Not In December.

In Summary Of The Count Hierarchy—Most > Many > Several—Most Officials See Eventual Cuts As Necessary, Including Centrists Who Will Let Data Guide A December Decision; Many Believe No Further Cuts Are Needed This Year; Several Favor A December Cut. The Anti‑Cut Camp Did Not Reach “Most,” But “Many” Outnumbered The “Several” Supporting A December Cut.

The October 29 Decision Statement Showed The FOMC Enacted A Second Consecutive 25‑Basis‑Point Cut, With Two Of Twelve Voters Dissenting. Unlike Prior Moves, Disagreements Emerged On Both The Magnitude And Whether To Continue Cutting. Among Dissenters, Newly Appointed Governor Milan, Nominated By President Trump, Favored A 50‑Basis‑Point Cut, While Kansas City Fed President Schmid Supported Holding Steady.

Hawkish Views Were Evident In Risk Management Discussions. Most Participants Judged That Moving Toward A More Neutral Stance Would Help Avoid A Sharp Deterioration In Labor Market Conditions. Many Also Saw Mounting Evidence That This Year’s Tariff Increases Have Limited Aggregate Inflation Impact, Arguing The Committee Should Suitably Ease To Address Employment‑Side Risks. At The Same Time, Most Warned That With Inflation Elevated And Labor Cooling Slowly, Further Cuts Could Intensify The Risk Of Persistent Inflation Or Be Misread As Weakening The Commitment To The 2% Target.

On Financial Stability, Some Officials Flagged Concerns Over “Overvalued Assets,” And Several Emphasized The Risk Of Disorderly Equity Declines, Especially If Markets Suddenly Reassess The Prospects For Artificial Intelligence Technologies. A Couple Also Highlighted Risks Linked To Elevated Corporate Leverage, Underscoring That The Fed Monitors Stability Alongside Inflation And Employment.

Regarding Balance Sheet Policy, The Last Meeting Statement Confirmed The FOMC Will End QT On December 1, Concluding The Program Launched On June 1, 2022, After Three And A Half Years. After QT Ends, Principal From Agency MBS Redemptions Will Be Reinvested In Short‑Term U.S. Treasuries, Substituting Maturing MBS Holdings. The Minutes Released Wednesday Reported That Almost All Participants Viewed Ending QT On December 1 As Appropriate. Participants Agreed That Recent Tightening In Money Markets Signaled QT Should End, And Many Noted That A Higher Share Of Short‑Term Treasuries Would Provide Flexibility To Manage Reserve Needs Or Nonreserve Liabilities, Helping Maintain Ample Reserves.

Nick Timiraos Wrote That The October Cut Stirred Strong Resistance To Another Cut In December. He Emphasized That The Minutes Reveal Intensifying Divergence Over The December Decision, With An Increasing Number Of Policymakers—Possibly A Narrow Majority—Uneasy About Cutting, Marking The Most Divided FOMC Stance In Years On An Upcoming Meeting’s Decision. He Added That Several Officials Opposed The October Cut, Potentially Including Regional Fed Presidents Without Votes This Year, While Some Pro‑Cut Officials Said They Could Accept No Action—Underscoring The Depth Of Internal Divisions.