U.S. FOMC Meeting Minutes (October 28-29, 2025)

In October, FOMC members expressed disagreement about December's decision 

• The Federal Reserve Open Market Committee (FOMC) lowered the federal funds rate to a target range of 4.00% to 3.75% in October, despite the government shutdown leaving them with little additional official data since their September decision.
• The minutes showed that the committee is still concerned about the impact of tariffs on inflation. Many participants also noted expectations of core goods inflation to pick up over the coming quarters, as tariffs pass through to firms' prices. On the other hand, a few participants did note that productivity gains from AI and automation may help tamp down cost increases. Still, participants seemed to agree that inflation expectations remained well anchored. 
• On the labor market, participants did comment on the lack of a jobs report for September and reported relying on private-sector estimates and limited government data. Pointing to the available data, including surveys, participants generally viewed the data as consistent with layoffs and hiring both having remained low, and the job market having softened through September and October, but not sharply. 
• Participants generally judged that "uncertainty about the economic outlook remained elevated", while still noting that inflation had moved up from earlier in the year and remained elevated. Many participants who voted in favor of lowering rates this meeting "could have also supported maintaining the level of the target range". 
• Critically, participants expressed strongly differing views about what would be appropriate at their December meeting. While most participants seem to favor reducing the policy rate over time, several of those with that view are unconvinced that would be appropriate in December. Many participants suggested that it would likely be appropriate to keep the target range unchanged for the rest of the year given their economic outlook.

Key Implications

• The key takeaway from this meeting, and the real surprise, is how strongly FOMC members disagree about what is likely in their December meeting. The recent upticks in inflation and the signs that tariffs are going to start passing through to inflation are eroding some members confidence in the balance of risks, and may be pushing out rate cuts further. 
• The release of the missing jobs data tomorrow will be critical for the FOMC. The potential for the committee to favor holding rates constant in December rests in part on the assessment of the labor market as softening but not sharply deteriorating. This potentially puts the rate outlook in a "bad news is good news" situation – jobs reports for September and October that confirm the labor market is only softening and not severely weakening will strengthen the case made by some FOMC members in September that a pause in December may be appropriate.

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