**MNI POLICY: FOMC Minutes: Rate Cuts Not on Preset Course>

--Some Called For Clarification Over When Cuts Will End

--Resuming Trend-Like Balance Sheet Expansion Not QE

--Several Officials Want to Consider Standing Repo Facility

By Jean Yung

     WASHINGTON (MNI) - The path forward for U.S. interest rates would 

depend on how the economic outlook evolves and some Federal Reserve 

officials think expectations for cuts are overdone, according to the 

minutes of the September Federal Open Market Committee meeting released 

Wednesday. 

     The description suggests that the FOMC would be open to a pause on 

rate cuts at the October 29-30 meeting, despite market pricing 

anticipating such a cut on the back of deteriorating U.S. and global 

manufacturing data and persistent uncertainty over U.S.-China trade 

negotiations. 

     "With regard to monetary policy beyond this meeting, participants 

agreed that policy was not on a preset course and would depend on the 

implications of in-coming information for the evolution of the econom-ic 

outlook," the minutes said. 

     "It might become necessary for the Committee to seek a better 

alignment of market expectations regarding the policy rate path with 

policymakers' own expectations for that path," a few officials judged, 

the minutes said.  

     In addition, several officials suggested that the FOMC statement 

"provide more clarity about when the recalibration of the level of the 

policy rate in response to trade uncertainty would likely come to an 

end," though the FOMC opted not to offer any new guidance regarding the 

latter in the September statement

     The following are other key points from the FOMC statement released 

Wednesday: 

     --Resuming asset purchases to allow the Fed's balance sheet to grow 

at a trend rate should not be seen as quantitative easing, which was 

aimed to provide monetary accommodation and ease financial conditions. 

Rather, it is intended to maintain the Fed's ample-reserves regime. 

     --Several officials suggested the FOMC consider introducing a 

standing repo facility as part of its monetary policy framework. 

     --Most officials wanted the September rate cut due to downwardly 

revised data for the year, risk management and the need to center 

inflation and expectations on the 2% objective. 

     --Officials resumed their discussion on inflation make-up 

frameworks and strategies at a time that rates cannot be cut further. 

They emphasized the need to use forward guidance and balance sheet 

policies earlier and more aggressively and noted that uncertainty 

associated with those policies are less than uncertainty over whether 

inflation make-up strategies will deliver benefits to the economy. 

--MNI Washington Bureau, Tel: +1 202-371-2121; email: dcoffice@marketnews.com

     ** MNI Washington Bureau: 202-371-2121 ** 

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