Grind, grind, grind: Brexit talks soldier on, summit loomsUpdated: 10/16/2019 11:07 AMBRUSSELS (AP) — The European Union and Britain sought to keep their chances of reaching a full Brexit divorce deal by Thursday's EU summit alive on We...
AP FACT CHECK: Dems flub details on guns, Syria in debateUpdated: 10/16/2019 11:07 AMWASHINGTON (AP) — A dozen Democrats seeking the presidency tussled in a debate packed with policy, flubbing some details in the process. Several gave ...
Jury selection begins in opioid trial despite delay requestUpdated: 10/16/2019 10:30 AMCLEVELAND (AP) — Jury selection began Wednesday in the first federal trial over the opioid epidemic despite a last-minute request from lawyers to dela...
Stocks edge lower as investors weigh earnings, sales dataUpdated: 10/16/2019 10:28 AMNEW YORK (AP) — Stocks edged lower in early trading on Wall Street Wednesday as investors weighed the latest batch of corporate earnings and a weak re...
US retail sales dip 0.3% in SeptemberUpdated: 10/16/2019 10:15 AMWASHINGTON (AP) — Retail sales dropped in September by the largest amount in seven months, possibly signaling that rising trade tensions and turbulent...
Worried about flying on a 737 Max? Your options may be fewUpdated: 10/16/2019 9:52 AMDALLAS (AP) — At some point early next year, air travelers will need to decide if they're willing to take a flight on a Boeing 737 Max. If they're not...
Brexit ignites fears of renewed violence in Northern IrelandUpdated: 10/16/2019 8:20 AMBELFAST, Northern Ireland (AP) — Kate Nash says the time known as "The Troubles" never really ended in Northern Ireland. While the 1998 Good Friday Ag...
Dutch farmers protest efforts to cut emissions, reduce herdsUpdated: 10/16/2019 8:15 AMTHE HAGUE, Netherlands (AP) — Dutch farmers drove their tractors in slow-moving convoys to a massive demonstration Wednesday to protest their treatmen...
Bank of America 3Q profits fall 19% due to chargeUpdated: 10/16/2019 7:59 AMNEW YORK (AP) — Bank of America's third quarter profits fell 19% from a year ago as the bank wrote down the value of its long-time joint venture payme...
Global shares mixed as investors await more earningsUpdated: 10/16/2019 7:51 AMTOKYO (AP) — Global markets were mixed Wednesday as investors await another batch of earnings reports from U.S. companies and Brexit talks faltered ye...
|Last Update: 4:27 PM ET 10/09/2019|
|Fed officials were sharply divided over September rate cut|
By MARTIN CRUTSINGER and CHRISTOPHER RUGABER
WASHINGTON (AP) - Federal Reserve officials were sharply divided last month when they decided to cut their key policy rate for a second time this year, a split that indicates the path forward for future rate cuts remains cloudy.
Minutes of the discussion at the September meeting released Wednesday showed that the majority of Fed officials believed a second quarter-point cut was appropriate given increased economic uncertainty from trade tensions and a slowing global economy.
However, a "couple" of participants indicated they favored a half-point reduction. They said the larger rate cut would reduce the risks of a possible recession.
But a third group of "several participants" argued that the Fed should not be cutting rates at all, saying that the current outlook for the economy had changed little since the central bank's last meeting.
This rare three-way split on the Fed's top policy panel indicates that Fed Chairman Jerome Powell may face challenges in reaching consensus on future moves on rates.
Many investors are hoping the Fed will cut rates for a third time this year when it meets again at the end of this month. The Fed's benchmark rate currently stands in a range of 1.75% to 2% with the next meeting coming on Oct. 29-30.
The CME Group, which tracks futures trading on the Fed's policy rate, is currently putting the chance of a third cut in October at around 84%.
Chris Rupkey, chief financial economist at MUFG, a global financial group, said, "We would bet that Powell will deliver the third rate cut the markets are clamoring for on Oct. 30 but rate cuts beyond this ... start to look less like the insurance style cuts" that Powell has referred to.
Michael Pearce, senior U.S. economist at Capital Economics, said he found the minutes "noticeably ambivalent" about the timing of the next cut. He said many Fed officials may be nearing the limits of how far they are comfortable cutting rates in the face of trade uncertainty and would prefer to "wait instead for more concrete signs of weakness in the incoming data."
The September rate cut, which followed a cut in July that was the first in a decade, was approved on a 7-3 vote. Two Fed officials, Esther George, president of the Fed's Kansas City regional bank, and Eric Rosengren, president of the Boston bank, dissenting in favor of no cut.
James Bullard, president of the St. Louis regional bank, dissented in the other direction, arguing that the threats to the economy were large enough that a bigger cut was needed.
The minutes however showed that there were other Fed officials who disagreed over the quarter-point rate cut although not strongly enough to dissent.
Following custom, the Fed does not name the Fed officials cited in the minutes, which were released after the customary three-week delay following a meeting.
The minutes showed officials also discussed the turbulence in a short-term funding market called the repo market that occurred in the week the central bank was meeting.
In remarks this week, Powell has said the Fed will be taking moves to deal with this turbulence.
The minutes showed that among the options discussed would be to allow the Fed's balance sheet to grow again. The Fed had been reducing its holdings that had surged to a peak of $4.5 trillion in the wake of the Great Recession as it engaged in several rounds of bond purchases aimed at lowering long-term rates and giving the economy a boost.
Those bond purchases were known as "quantitative easing." Powell said that while various options were being weighed for providing more stability for the short-term funding markets, the effort should not be considered a new round of quantitative easing.
Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.