FED: Sept FOMC Minutes: Split Decision, Relative Patience Despite 50bp Cut

None of the dovish policy rhetoric in the September FOMC minutes (link) should come as much of a surprise after the outsized 50bp cut and hearing Chair Powell's post-meeting press conference. In short, "In light of the progress on inflation and the balance of risks, all participants agreed that it was appropriate to ease the stance of monetary policy", and " a substantial majority of participants supported lowering the target range for the federal funds rate by 50 basis points". More interesting is the reasoning by the minority on the Committee who were not as convinced - there are more words devoted in the text to the deliberation over opting to go 25bp than to the decision to go 50bp. In this regard the Minutes read as very slightly more hawkish than might have been expected:

• "noting that inflation was still somewhat elevated while economic growth remained solid and unemployment remained low, some participants observed that they would have preferred a 25 basis point reduction of the target range at this meeting, and a few others indicated that they could have supported such a decision. Several participants noted that a 25 basis point reduction would be in line with a gradual path of policy normalization that would allow policymakers time to assess the degree of policy restrictiveness as the economy evolved. A few participants also added that a 25 basis point move could signal a more predictable path of policy normalization. A few participants remarked that the overall path of policy normalization, rather than the specific amount of initial easing at this meeting, would be more important in determining the degree of policy restriction."
• "Some" would have preferred a 25bp cut, with "a few others" saying they could have supported such a decision. Recall that in FOMC-speak, "some" is more than "several" (which is more than "few"), so overall it suggests that the decision was quite split - though the Chair's case to cut carried the day, and some went along with it as they were more focused on the longer-term rate outlook rather than the initial cut size.
• The Minutes clearly emphasize a data-dependent approach,  anticipating that if the economy evolved as expected, "it would likely be appropriate to move toward a more neutral stance of policy over time". But while "several" "remarked that reducing policy restraint too soon or too much could risk a stalling or a reversal of the progress on inflation", they were outnumbered by "some" (ie a slightly greater number) "emphasized that reducing policy restraint too late or too little could risk unduly weakening economic activity and employment". It doesn't seem from this that the vast majority support an aggressive easing approach - or at least, the debate is still unsettled.
• On the balance of risks: "Almost all participants judged that the risks to achieving the Committee's employment and inflation goals were roughly in balance." And on inflation: "almost all participants indicated they had gained greater confidence that inflation was moving sustainably toward 2 percent. " (implying one or two did not share the broader Committee view on the balance of risks and "greater confidence").
• On the labor market: "A couple of participants...did not perceive an increased risk of a significant further weakening in labor market conditions".
• On upside inflation risks (echoing Dallas Fed Pres Logan's comments today almost verbatim): "A couple of participants specifically noted upside inflation risks associated with geopolitical developments. In addition, some participants cited risks that progress toward the Committee's 2 percent inflation objective could be stalled by a larger-than-anticipated easing in financial conditions, stronger-than-expected consumption growth, or continued strong increases in housing services prices."