Federal Reserve minutes cast doubt on December US interest rate cut

Federal Reserve officials were at odds over cutting interest rates last month, as minutes released from their October meeting on Wednesday showed more central bankers uncomfortable about reducing rates in December.

“In discussing the near-term course of monetary policy, participants expressed strongly differing views about what policy decision would most likely be appropriate at the committee's December meeting,” minutes from the Fed's October 27-28 meeting read.

“Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year.”

The minutes appear to reflect remarks made in Fed Chair Jerome Powell's post-meeting press conference last month, where he said a December rate cut was “not a foregone conclusion. Far from it".

The Federal Reserve cut US interest rates by 25 basis points in a 10-2 decision last month, bringing its target range for the federal funds rate down to between 3.75 and 4 per cent.

Central banks in the UAE and Saudi Arabia joined others in the Gulf Co-operation Council in following suit. Only Kuwait, where the dinar is tied to a basket of currencies, held rates steady.

Investors have shifted their December rate cut expectations from about 94 per cent one month ago to about 33 per cent today, according to CME Group data.

Growing divisions

Fed officials are growing increasingly divided over which side of their dual mandate requires greater attention: tackling inflation or shoring up a stalling labour market.

The labour market's current low-hire, low-fire environment comes as inflation has “shown little sign of returning sustainably”, the minutes read.

Further complicating the Fed's near-term decisions was the 43-day government shutdown, which blocked the US cent