The Federal Reserve's vote Wednesday to lower its benchmark interest rate by a quarter of a percentage point exposed a rare divide among policymakers as concerns grow over slowing job growth and persistent inflation, with two members of the Federal Open Market Committee dissenting from the majority of the group.
The members, Gov. Stephen Miran and Kansas City Fed President Jeffrey Schmid, dissented for different reasons, with Miran favoring a deeper half-point cut to support the softening labor market, and Schmid arguing against any reduction, citing still elevated inflation.
Both dissenting members had outlined their views publicly in August, with Miran warning then that monetary policy was "very restrictive" and Schmid saying there was "no urgency" to cut rates, according to reports.
The split vote marked only the third instance since 1990 in which policymakers dissented in opposing directions at the same meeting, underscoring deep divisions within the central bank about how best to steer the economy through slowing growth and stubborn price pressures.
The 10-2 vote lowered the federal funds rate to a range of 3.75% to 4.00%, marking the latest effort by the central bank to balance rising risks to employment against inflation that remains above its 2% target.
The Fed also announced it will end the runoff of its securities holdings on Dec. 1, a move meant to stabilize liquidity after recent strains in money markets.
"Available indicators suggest that economic activity has been expanding at a moderate pace," the Fed said in its statement.
"Job gains have slowed this year, and the unemployment rate has edged up but remained low," it added.
Policymakers noted that inflation "has moved up since earlier in the year and remains somewhat elevated."
The decision underscores the difficult balancing act facing Chair Jerome Powell and other central bankers as they navigate uncertain data amid the ongoing federal government shutdown.
With official labor and inflation reports frozen since August, the Fed relied on partial indicators suggesting continued economic growth but a cooling job market.
Markets largely anticipated the quarter-point move. U.S. stock indexes rose modestly following the announcement, while Treasury yields climbed as investors continued to bet on another cut in December.
"The Fed is walking a fine line between easing too much and doing too little," said Alexandra Wilson-Elizondo, global co-chief investment officer at Goldman Sachs Asset Management. "If conditions hold, another 25-basis-point cut at the December meeting seems likely."
The Fed acknowledged that "uncertainty about the economic outlook remains elevated" and said it would monitor inflation, labor market data, and global developments in determining future policy moves.
Reuters contributed to this report.
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