Federal Reserve officials stressed that risks to the U.S. economy remained elevated as they agreed to put interest rates on hold following their third cut this year.
Many participants saw downside risks to the economic outlook as elevated, "further underscoring the case for a rate cut at this meeting,'' according to minutes of the Oct. 29-30 Federal Open Market Committee session released Wednesday in Washington.
"In particular, risks to the outlook associated with global economic growth and international trade were still seen as significant,'' the minutes said. "The risk that a global growth slowdown would further weigh on the domestic economy remained prominent."
The FOMC lowered rates by a quarter percentage point at its October gathering, the third such move in three months. At his press conference following the announcement, Chairman Jerome Powell said monetary policy was "in a good place,'' signaling rates would stay on hold until officials saw a "material'' change in their economic outlook.
The 10-year benchmark yield held steady around 1.74% following the release of the minutes, while the dollar was little changed. Traders added slightly to their positioning for a rate cut next year, with futures markets now fully priced for a quarter-point move by early in the third quarter.
The minutes showed "most participants" judged policy would be well calibrated after the Oct. 30 cut and "likely would remain so as long as incoming information about the economy did not result in a material reassessment of the economic outlook."
"Some" officials, however, had preferred to leave rates steady at the meeting because their forecasts for the economy remained favorable. A "few" also said cutting rates would raise financial stability risks.
At the gathering, a couple of participants said the committee should reinforce its statement with additional communications indicating that another rate reduction "was unlikely in the near term unless incoming information was consistent with a significant slowdown in the pace of economic activity," the minutes showed.