The probability of a rate cut in December has big dump to 33%! The Federal Reserve (FED) October policy meeting minutes: internal divisions are extremely serious, and the only good news is the stop of balance sheet reduction.

The Federal Reserve (Fed) of the United States released the minutes of the October FOMC monetary policy meeting today (20th) at 3 AM Taiwan time. The internal divisions are too severe! (Background: Fed's spokesperson: December interest rate cut becomes a challenge, data gaps led at least three board members to vote against it) (Additional context: The U.S. will release the September non-farm payroll report next week, and the market is closely watching the impact of the Fed (Fed) interest rate cut) The Federal Reserve (Fed) of the United States released the minutes of the October FOMC monetary policy meeting today (20th) at 3 AM Taiwan time. The minutes clearly show that Fed officials had a rare and significant disagreement during the October meeting regarding whether to cut interest rates: should the priority be to guard against “slowing labor market” or to continue suppressing “stubborn inflation”? The views of the committee members are completely divergent. Hope for a December interest rate cut has greatly diminished: most members tend to “not take action this year”. The most noteworthy sentence in the minutes that the market focused on is: “Many” officials believe that there is no further need for interest rate cuts before 2025, which directly contradicts the market's previous almost certain expectation of a 25 basis point cut in December. After the release of the minutes, the market's probability prediction for a December interest rate cut has plummeted to about 33%, according to the CME FedWatch tool. However, the minutes also left a glimmer of hope: “Most participants” still believe that there will be further rate cuts at some point in the future, just “not necessarily in December”. Additionally, officials are generally concerned that the labor market is cooling, while inflation “shows almost no signs of sustainably returning to the 2% target.” The original text of the minutes states: In such a dilemma, “many participants supported this rate cut (in October), some committee members supported it but were also willing to forgo a cut, and several committee members explicitly opposed the rate cut.” At the same time, the biggest controversy within the Fed is: whether the current interest rate is still considered “restrictive”? Doves believe that even a 25 basis point cut would still suppress the economy, while hawks believe that the resilience of the U.S. economy is astonishing, and the current interest rate is not actually tight. Three factions have emerged: the doves, hawks, and centrists. From recent public speeches and voting records, the FOMC has clearly divided into three factions: Dove representatives: Board members Miran (advocating a 50 basis point cut), Waller, Bowman are concerned about rising unemployment rates; Hawk representatives: Kansas Fed President Schmid (who voted against this time), Boston Fed President Collins, St. Louis Fed President Musalem are worried that cutting too fast will prevent inflation from returning; Centrists: Chair Powell, Vice Chair Jefferson, New York Fed President John Williams emphasize “patiently observing data”. The decision to cut interest rates in October ultimately passed with a narrow vote of 10:2, marking one of the most discordant votes in recent years. The only good news: Quantitative tightening will stop at the end of the year, and the market breathes a sigh of relief. Despite ongoing disputes over the interest rate path, there is one nearly universally supported positive in the minutes: the FOMC unanimously agreed to officially stop balance sheet reduction (end quantitative tightening, QT) starting December 2025. Stopping QT is seen as substantial support for market liquidity and is widely welcomed. Related reports: Bitcoin plunged by $5,000 to $98,000 overnight! The probability of a December interest rate cut has greatly decreased, Nvidia fell more than 3%, tech stocks plummeted. Don't just look at rate cuts! What changes will the Fed's end of quantitative tightening bring to liquidity? Bitcoin price analysis | Market volatility increases after interest rate cuts, challenging new swing trading highs <Probability of a December rate cut plummets to 33%! The Fed's October policy meeting minutes: severe internal divisions, the only good news is the halt of balance sheet reduction> This article was first published in BlockTempo, the most influential blockchain news media.