The latest minutes from the Federal Reserve’s September meeting suggest policymakers are leaning toward further rate cuts this year. While most officials backed the quarter-point reduction, the discussion reflected growing concern about labour market risks and a more balanced inflation outlook. The tone overall was cautious but pointed to a continued easing bias.

Key Quotes

Most participants judged it would likely be appropriate to ease policy further over the remainder of 2025.

Some participants noted financial conditions suggested policy may not be particularly restrictive.

Those participants judged a cautious approach to future policy was warranted.

Almost all participants supported a quarter-percentage-point cut to the fed funds rate at the september meeting.

Most participants judged downside risks to employment to have increased, while upside risks to inflation had either diminished or not increased.

Participants generally noted their judgements about appropriate policy action reflected a shift in the balance of risks.

A few participants saw merit in keeping the fed funds rate unchanged or said they could have supported such a decision.

One participant preferred a half-percentage-point rate cut.

A majority of participants emphasised upside risk to their outlooks for inflation.

A few participants noted the standing repo facility would help keep the fed funds rate in the target range and ensure money market pressures would not disrupt ongoing quantitative tightening.

Fed staff revised up gdp growth projections for 2025 through 2028.

Market reaction to the FOMC Minutes

The Greenback remains firm for yet another day, lifting the US Dollar Index (DXY) to fresh two-month highs north of the 99.00 hurdle amid mixed US yields across the curve.

This section below was published as a preview of the FOMC Minutes of the September 16-17 meeting at 13:15 GMT.

• The Minutes of the Fed’s September 16-17 policy meeting will be published on Wednesday.
• Details surrounding the discussions on the decision to cut the policy rate by 25 bps will be scrutinized by investors.
• Markets widely expect the Fed to opt for another 25 bps rate cut in October. 

The Minutes of the United States (US) Federal Reserve’s (Fed) September 16-17 monetary policy meeting will be published on Wednesday at 18:00 GMT. The US central bank decided to cut the policy rate by 25 basis points (bps) to the range of 4%-4.25% at this meeting, but Fed Governor Stephen Miran preferred to lower the fed funds rate by 50 bps.

Jerome Powell and company opted to reduce policy rate in September

The Federal Open Market Committee (FOMC) decided to cut the interest rate by 25 bps in September, as widely anticipated. In the policy statement, the Fed acknowledged that jobs gains have slowed and reiterated that inflation remained “somewhat elevated.”

The revised Summary of Economic Projections (SEP), published alongside the policy statement, pointed to an additional 50 bps of cuts by the end of the year, followed by 25 bps of cuts in 2026 and 2027. 

In the post-meeting press conference, Fed Chair Jerome Powell explained that they don’t feel the need to move quickly on rates, while adding that the risks to the employment mandate had grown. “New data suggest there is meaningful downside risk to the labour market; that's broadly accepted,” Powell said. Regarding the inflation outlook, he noted rising goods prices from tariffs could lift inflation, but added that they expect that to be a one-time rise.

TD Securities analysts think that the FOMC Minutes will highlight the division on the Committee between the hawks and doves. “Most participants likely saw the policy recalibration as necessary. However, we expect some participants saw further easing this year as unlikely given tariff-driven inflation risks. Many participants likely anticipate further easing owing to labor market risks,” they added.

When will FOMC Minutes be released and how could it affect the US Dollar?

The FOMC will release the Minutes of the September 16-17 policy meeting at 18:00 GMT on Wednesday. 

According to the CME FedWatch Tool, markets are currently fully pricing in a 25 bps cut in the October meeting and see about an 80% probability of one more 25 bps cut in December. This market positioning suggests that the US Dollar (USD) could weaken against its rivals with immediate reaction, in case the publication confirms that policymakers are willing to opt for rate reductions in the remaining two meetings of the year. On the other hand, the USD could hold its ground if the discussions highlight that some officials could turn reluctant to lower rates if they see an improvement in labor market conditions or signs of persistent inflation.

Nevertheless, the market reaction to the FOMC Minutes could remain short-lived, with investors remaining focused on the developments surrounding the US government shutdown. In case markets turn optimistic about lawmakers restoring funding to the government, the USD could gather strength against its rivals with the immediate reaction. Still, market participants could refrain from taking large positions in anticipation of the release of the postponed macroeconomic data, including Nonfarm Payrolls for September.

Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief outlook for the USD Index:

“The Relative Strength Index (RSI) indicator on the daily chart rises toward 60 and the USD Index trades above the 100-day Simple Moving Average (SMA), which aligns as a pivot level at 98.20. On the upside, 99.40 (Fibonacci 23.6% retracement of the January-July downtrend) aligns as the next resistance level before 100.00 (round level, static level) and 101.35 (200-day SMA).”

“In case the USD Index fails to stabilize above 98.20, technical buyers could be discouraged. In this scenario, 97.70 (20-day SMA) could be seen as an interim support level before 96.20 (end-point of the downtrend) and 95.00 (round level).”