Rate Cut Odds Falter as Fed Grapples with Mixed Economic Signals

The Federal Reserve's September FOMC meeting minutes revealed a cautious stance amid conflicting economic indicators. While labor market softening raised concerns, persistent inflation above the 2% target complicated policy decisions. Odds for an October rate cut dipped marginally to 92.5%, reflecting heightened uncertainty.

Committee consensus favored gradual easing, with most officials projecting at least two 25bps cuts by 2025. The dissenting voice of Governor Stephen Miran, advocating for sharper 50bps reduction, underscored growing divisions. Unemployment risks dominated discussions, though some members noted stalled progress on inflation targets.

Market participants now parse every datum for clues on the Fed's next move. The central bank maintains its readiness to pivot, but the path forward grows increasingly opaque as economic crosscurrents intensify.