The minutes from the Federal Reserve's meeting revealed that during the September interest rate meeting, Federal Reserve officials disagreed on the magnitude of the rate cut, with the vast majority favoring a more substantial reduction of 50 basis points.

The minutes indicated that those in favor of this rate cut believed that recalibrating the monetary policy stance would better align it with recent inflation and labor market indicators. Some officials emphasized that there was a "compelling reason" to lower the interest rate by 25 basis points at the end of July meeting, and recent data only reinforced the rationale for this rate cut. The minutes are typically released three weeks after the interest rate meeting.

The Federal Reserve usually adjusts the policy interest rate in increments of 25 basis points, allowing officials more time to study the impact of policy changes. The September meeting minutes showed that indeed some officials believed that a smaller rate cut was justified given the robust economic activity, low unemployment rate, and inflation rate still above the Federal Reserve's target. Moreover, a smaller rate cut would make the path to monetary policy normalization more predictable.

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"Several participants noted that a 25 basis point reduction was in line with a gradual path to policy normalization, which would give policymakers time to assess the degree of policy restraint as the economy evolves," the minutes stated.

"These individuals expressed a preference for lowering the target range by 25 basis points at this meeting, and some participants indicated that they could have supported such a decision," the minutes continued.

Additionally, some Federal Reserve officials had indicated before the September meeting that they would prefer to start with a smaller adjustment and would accelerate the pace of rate cuts if the economy appeared to be softening further.

However, the Federal Open Market Committee (FOMC) ultimately approved the decision to cut rates by 50 basis points with an 11 to 1 vote, with only Federal Reserve Governor Michelle Bowman supporting a 25 basis point rate cut. In the policy statement released after the meeting, the Federal Reserve stated that this decision was based on progress made in combating inflation and considerations for the balance of risks.

The minutes stated that if the inflation rate continues to move closer to the Federal Reserve's 2% target and employment data continues to grow in line with recent trends, then gradually shifting towards a more neutral policy stance over time may be appropriate. However, the minutes did not specify which factors future interest rate decisions would specifically depend on.

The minutes stated that officials unanimously agreed that a 50 basis point rate cut should not be seen as a concern for the economic outlook, nor should it be taken as a signal that the Federal Reserve is preparing to cut rates rapidly.

At the time of the September meeting, economic data showed that the inflation rate was steadily declining towards the Federal Reserve's 2% target, while the labor market was cooling down, with the unemployment rate rising from 3.7% at the end of last year to 4.2% in August.Since the September meeting, the U.S. economy has shown greater resilience. Data released by the Department of Labor last week showed that non-farm employment increased by 254,000 people in September, far exceeding the market's expectation of around 150,000. The unemployment rate was 4.1%, slightly down by 0.1 percentage points from August. At the same time, the Department of Labor also raised the data for July and August.

Federal Reserve Chairman Jerome Powell said in Nashville, Tennessee, last week that the Federal Reserve is not in a hurry to cut interest rates quickly. If the economic slowdown is faster than expected, "then we can speed up the pace of interest rate cuts. If it is slower than expected, we can slow down the pace of interest rate cuts. This is the real determining factor."

Affected by the September non-farm employment data released last week, the interest rate futures market's expectations for interest rate cuts at the next meeting have changed. Before the report was released, investors believed that the probability of the Federal Reserve cutting interest rates by 50 basis points at the meeting held on November 6th and 7th was about one-third. After the data was released, investors no longer believed that the Federal Reserve would cut interest rates by 50 basis points in November.

The FedWatch tool of the Chicago Mercantile Exchange shows that the market currently believes that the probability of the Federal Reserve cutting interest rates by 25 basis points in November is 78.8%, and the probability of not taking action is 21.2%.

Several Federal Reserve officials this week said they expect to cut interest rates further in the coming months, but they also reiterated Powell's view that the Fed is not in a hurry to cut interest rates quickly.