Interest rates: The Fed moves towards further easing

The Fed minutes published on October 8 confirm an expected, but delicate, monetary shift. If the rate cut is now underway, the extent of the movement between now and the end of the year still divides the committee. In a context of slowing employment, contained inflation and government paralysis, this shift weighs heavily on market expectations. For crypto investors, sensitive to monetary policy signals, each hesitation from the Fed becomes a factor of volatility.

Growing divergences within the FOMC

At the end of its meeting on September 16 and 17, the American Federal Reserve voted, by a large majority of 11 votes to 1, to lower its key rate by 25 basis points, bringing the target range to 4% – 4.25%.

The report of this meeting underlines that ” Nearly all participants noted that with the narrowing of the target range for federal rates at this meeting, the Committee was well positioned to respond quickly to potential economic developments.“.

This orientation is directly linked to a perceived deterioration in the job market, which pushes the Fed to adopt a more flexible posture.

The analysis of the economic context raises contrasting assessments among the members of the FOMC, with arguments which reflect divergent readings of macroeconomic signals:

• Some members believe that“financial conditions are not particularly restrictive”which would justify a wait-and-see attitude;

• Others consider that the economic slowdown is already perceptible, and that it is necessary to act preventively;

• The role of customs duties in the persistence of inflationary pressures remains an uncertainty mentioned in the discussions;

• The federal shutdown, which delays the release of key data, further complicates the assessment of short-term economic risks.

In this context, the report shows a vigilant but divided Fed, aware that its next decisions will have to adjust to still incomplete on-chain data and sometimes contradictory market signals.

Internal disagreements and job tensions

If the general direction of monetary policy is hardly debated, the differences have crystallized around the dissonant voice of Stephen Miran, appointed governor. Present for the first time at this meeting, Miran distinguished himself by voting against the majority decision, preferring a reduction of 50 basis points.

In official documents, his name does not appear, but his opinion was explicitly mentioned in the post-meeting communication, and confirmed during his subsequent speaking engagements.

He also declared that he was the only one to favor a much faster decline trajectory than his colleagues. This positioning reflects a growing divide within the FOMC, between supporters of a gradual adjustment and those who advocate more vigorous monetary easing, in the face of a more marked economic slowdown than anticipated.

Beyond the votes, the substance of the discussions reveals growing concerns about the labor market, presented as the main factor leading to monetary adjustment.

While some members called for caution, stressing that financial conditions did not seem “not particularly restrictive“, the balance of risks has clearly changed, with less pressure on inflation and increased attention paid to the deterioration of employment. At the same time, the issue of tariffs imposed by the Trump administration was raised, without being considered a lasting inflationary threat.

This situation could become even more complex in the coming weeks. Indeed, the American shutdown is disrupting the collection of key macroeconomic data by the Departments of Labor and Commerce. If this administrative paralysis continues, the Fed, despite its hesitations, will have to make its next decisions, particularly at the meeting on October 28 and 29, without reliable data on inflation, unemployment or consumption.