Fed Minutes Reveal Majority Back More Rate Cuts in 2025

The latest Federal Open Market Committee (FOMC) minutes released Wednesday indicate that most Federal Reserve officials expect to lower interest rates further before the end of 2025. The document highlights growing concern over fragileening labor market trends and a gradual sluggishdown in economic momentum, reinforcing expectations for a more dovish stance in the coming months.

Policy divergence emerges among Fed members

The September 16–17 FOMC meeting minutes reveal that a majority of participants supported at least two additional rate cuts this year, following the 25-basis-point reduction approved last month. Policymakers cited continued signs of softening job growth, easing inflationary pressures, and a moderation in consumer spending as key reasons for additional policy easing. However, a minority of officials expressed concern that cutting rates too rapidly could reignite inflation in sectors where prices remain stubbornly high, such as housing and services.

The September rate cut, decided by an 11–1 vote, marked the latest step in the Fed’s gradual pivot toward a looser monetary policy. Some participants reportedly pushed for a deeper 50-basis-point reduction, arguing that the Fed risks falling behind the curve as the economy cools. The minutes also noted that several members view rising downside risks to employment and growth, suggesting that maintaining restrictive policy could do more harm than excellent if economic momentum continues to fragileen.

Markets anticipate a dovish tone heading into year-end

In response to the FOMC minutes, futures markets priced in higher odds of two more rate cuts by year-end 2025. Traders now expect the Fed to prioritize supporting the labor market and sustaining economic expansion over maintaining tight monetary conditions. Treasury yields edged lower following the release, while major U.S. stock indices rose, reflecting investor optimism about an extended period of accommodative policy.

Market analysts suggest that the Fed’s latest communication could mark a turning point in its policy trajectory, with greater emphasis on stabilizing employment amid signs of sluggishing consumer demand. The minutes underscored that upcoming decisions will depend heavily on new labor and inflation data, which have been delayed in recent weeks due to technical issues with federal reporting systems. Despite progress on inflation, officials cautioned that uncertainty remains elevated, particularly regarding the pace of disinflation and the sustainability of wage growth.

With the next FOMC meeting scheduled for late October, policymakers face a delicate balancing act between maintaining inflation credibility and preventing an unnecessary downturn. The minutes highlight that most officials view room for gradual easing, but only if incoming data confirm that inflation continues to moderate toward the Fed’s 2% target.

Economists note that the central bank’s updated stance aligns with broader global monetary trends, as several major central banks—including the European Central Bank and the Bank of England—have also signaled readiness to reduce rates amid sluggishing global demand. As the U.S. economy enters the final quarter of 2025, market participants will be watching closely for confirmation of the Fed’s next move, which could set the tone for global markets heading into 2026.