Several Federal Reserve officials went against their gut in September when they backed a jumbo-sized rate cut, raising concerns that policymakers were misguided in their deliberations.

According to the minutes of the Sept. 17-18 Federal Open Market Committee (FOMC) meeting, the decision to lower interest rates by 0.5% was far from unanimous. Although most officials ultimately backed the decision, it didn’t come without hesitation.

“FOMC minutes basically showed [that Chairman] Powell basically pushed the committee to do 50 bps in September,” wrote Bloomberg chief U.S. economist Anna Wong.

In Wong’s estimation, the minutes showed that more Fed officials supported a 0.25% rate cut last month before ultimately backing Powell’s decision to go bigger.

Wong drew attention to several passages of the meeting minutes, which clearly showed that several officials were hesitant about moving too quickly.

“Several participants remarked that reducing policy restraint too soon or too much could risk a stalling or a reversal of the progress on inflation,” the FOMC minutes read.

“Some participants noted that uncertainties concerning the level of the longer-term neutral rate [...] complicated the assessment of the degree of restrictiveness of policy and, in their view, made it appropriate to reduce policy restraint gradually,” the transcript continued.

The Fed’s lone dissenter tried to warn her colleagues

When FOMC officials cast their votes in September, all but one voted against the jumbo-sized rate cut.

The lone dissenter was Governor Michelle Bowman, who warned at the time that the Fed’s move “could be interpreted as a premature declaration of victory” over inflation.

Bowman’s hesitation may have already been justified after the September inflation data came in hotter than expected.

Although the Consumer Price Index (CPI) cooled in September, food and shelter inflation remained elevated.

The core CPI, which excludes volatile food and energy costs, accelerated to a 3.3% annual rate in September from 3.2% the previous month.

Sticky inflation may be a sign of things to come, with economists at BlackRock warning that cost pressures will remain elevated in the fourth quarter.

For these reasons, the Fed’s decision to go big in September was a costly mistake, said David Roche, the founder of Quantum Strategy.

Roche described the Fed’s decision as “silly, populist, and panicky.”

Now that inflation has proven resilient, “the Fed has some work to do, to make sure we land the right way,” said Jeremy Goff, a managing director at Palmer Square Capital Management.

This “landing” refers to the Fed’s commitment to cooling inflation without tipping the economy into a recession—something policymakers have described as a “soft landing.”

Some Fed officials have already started to question whether they should continue lowering interest rates for the rest of the year.

As Creditnews recently reported, Atlanta Fed Bank President Raphael Bostic said he’s “totally comfortable” with skipping a November rate cut due to lingering inflation.

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