Members of the Federal Open Markets Committee cited increased trade uncertainty and geopolitical pressures as reasons to cut the federal funds rate by a quarter-point at its last meeting, according to meeting minutes released Wednesday.
The committee lowered the target range for the federal funds rate by 25 basis points to a range of 1.75% to 2% following a two-day meeting that took place Sept. 17-18.
Since the committee's previous meeting in July, "Participants generally had become more concerned about risks associated with trade tensions and adverse developments in the geopolitical and global economic spheres," the minutes said.
Although readings on the labor market and the overall economy continued to be strong, a clearer picture of protracted weakness in investment spending, manufacturing production and exports had emerged, according to the minutes.
"Participants also noted that there continued to be a significant probability of a no-deal Brexit, and that geopolitical tensions had increased in Hong Kong and the Middle East," the minutes said. "Several participants commented that, in the wake of this increase in downside risk, the weakness in business spending, manufacturing, and exports could give rise to slower hiring, a development that would likely weigh on consumption and the overall economic outlook."
Seven of the 10 committee members voted to lower the funds rate 25 basis points, while two — Kansas City Fed President Esther L. George and Boston Fed President Eric S. Rosengren — wanted to keep the rate steady, and one — St. Louis Fed President James Bullard — voted to cut the rate 50 basis points.
Bob Miller, BlackRock's head of Americas fundamental fixed income, said in a statement that although not universal among FOMC members, "the amount of support for accommodation in the minutes still seems consistent with a committee strongly considering another reduction in interest rates at its next meeting later this month."
The committee's next meeting is Oct. 29-30.