Finance
Fed minutes reveal lively September debate about whether first rate cut should be big or small
There was a divide within the Federal Reserve about whether its first interest rate cut in more than four years should be big or small, according to minutes from the central bank’s September meeting released Wednesday.
A “substantial majority” of Fed officials supported lowering rates by 50 basis points at the last meeting, but “some” would have preferred to have lowered by 25 basis points and “a few others indicated that they could have supported such a decision,” the minutes read.
Those who argued for a 25 basis point reduction noted that inflation was still somewhat elevated, while economic growth was strong and unemployment low.
Several said a smaller cut would line up more with a gradual reduction in the policy rate that would be more predictable and allow more time to assess any impacts on the economy.
Those who argued for a jumbo-sized cut said a 50 basis point move would help sustain strength in the economy and the job market while continuing to bring down inflation.
Some even said there had been a case for a 25 basis point rate cut at the previous meeting in July, and that recent data offered even more evidence that inflation continues to drop while the labor market cools.
Some of this internal division at the Fed was made public on Sept. 18 as the decision to cut by 50 basis points was announced, with Fed governor Michelle Bowman dissenting and saying she preferred 25 basis points.
No Fed official has voted against a policy decision in two years, matching one of the longest such streaks in the past half-century. Moreover, no Fed governor has dissented on a rate decision since 2005.
The Fed’s rate-setting committee was also almost evenly split on the number of additional rate cuts expected this year, with seven policymakers favoring one additional 25 basis point rate cut before year-end and nine members favoring 50 basis points of additional easing. Two policymakers expected no more rate cuts.
Fed Chair Jerome Powell, in a press conference with reporters last month, acknowledged the dissent but also said there was “broad support” for the cut and a “lot of common ground” among his fellow policymakers.
In the week since the decision, several policymakers have offered public support for a jumbo rate cut of 50 basis points, citing progress on inflation and a cooling job market.
Atlanta Fed president Raphael Bostic has said that residual concerns might have led him to trim by a smaller 25 basis points at the September policy meeting, but that would have ignored a recent cooling in the job market.
Minneapolis Fed president Neel Kashkari said he voted in favor of cutting by 50 basis points because “the balance of risks has shifted away from higher inflation and toward the risk of a further weakening of the labor market, warranting a lower federal funds rate.”
Chicago Fed president Austan Goolsbee also said he was “comfortable” with a 50 basis point cut, viewing it “as a demarcation” that the central bank is now back to thinking as much about achieving maximum employment as it is price stability.
But a stronger-than-expected jobs report released last week now has analysts wondering whether the central bank will curtail rate cuts or if it moved too quickly with a 50 basis point reduction. There are also worries that inflation could be re-elevated as a concern.
Fed officials will get a fresh reading on inflation Thursday when the Consumer Price Index is due out. That measure is expected to keep in line with what officials want to see.
Economists expect core inflation — which eliminates volatile food and energy prices the Fed can’t control — held steady on an annual basis in September at 3.2% from the same level in August. Month over month, CPI is expected to have grown by 0.2%, compared with 0.3% in August.
Some Fed officials are urging a gradual path to cuts as they look to balance downside risks to unemployment with continuing to bring down inflation.
Dallas Fed president Lorie Logan became the latest official to voice that view on Wednesday, saying in a speech that “a more gradual path back to a normal policy stance will likely be appropriate from here to best balance the risks to our dual-mandate goals.”
Powell made it clear in remarks on Sept. 30 that the central bank isn’t in a “hurry” to bring interest rates down and would prefer smaller cuts.
He also reiterated that the consensus of Fed officials outlined at the September meeting was for two more 25 basis point rate cuts this year, saying, “it wouldn’t mean more fifties.”
Other officials, including New York Fed President John Williams, St. Louis Fed president Alberto Musalem, and Chicago Fed president Austan Goolsbee, all have said recently they favor bringing interest rates lower “over time.”
At the September meeting, according to the minutes, officials said it’s important to communicate that lowering rates should not be interpreted to mean the Fed believes the economic outlook has soured or that the Fed will lower rates more rapidly than the path laid out.
“Some participants emphasized that reducing policy restraint too late or too little could risk unduly weakening economic activity and employment. A few participants highlighted in particular the costs and challenges of addressing such a weakening once it is fully under way,” the minutes read.
Almost all participants saw upside risks to the inflation outlook as having diminished, while downside risks to employment were seen as having increased.
While Fed officials generally viewed the job market as solid, some said that the recent pace of job increases had fallen short of what was required to keep the unemployment rate stable on a sustained basis, assuming a constant labor force participation rate.
Many said that evaluating the job market had been challenging, with increased immigration, revisions to reported payroll data, and possible changes in the underlying growth rate of productivity.
Several participants emphasized the importance of continuing to use disaggregated data or information provided by business contacts as a check on readings on labor market conditions obtained from aggregate data.
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The FTSE 100 (^FTSE) was hovering around the flatline on Friday, while European stocks headed lower, as traders shrugged off Donald Trump’s latest pause on striking Iran’s energy infrastructure.
On Thursday night, the US president extended the deadline for Iran to open the strait of Hormuz by 10 days, meaning the new date would be 6 April. He claimed that talks were “going very well”. However, Iran denied it was “begging to make a deal”, despite Trump’s earlier claims.
It comes after Wall Street posted its biggest daily loss since the Iran war began on Thursday.
The Wall Street Journal also reported on Thursday that the US was considering sending as many as 10,000 additional troops to the Middle East.
Tony Sycamore, market analyst at IG, said Trump has extended the uncertainty gripping markets.
“While the rhetoric around de-escalation and dialogue is certainly preferable to outright conflict, the market appears to be growing increasingly numb to President Trump’s verbal reassurances. By extending the deadline, it effectively kicks the can down the road, pushing back any concrete resolution regarding the reopening of the Strait of Hormuz. This, in turn, simply extends the uncertainty weighing on markets and the broader global economy.”
Elsewhere, UK retail sales dipped by 0.4% in February, following a rise of 2.0% in January, the Office for National Statistics revealed. In the December to February quarter, sales volumes were up 0.7% compared with the previous three months.
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London’s benchmark index (^FTSE) was hovering around the flatline in early trade
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Germany’s DAX (^GDAXI) dipped 0.5% and the CAC (^FCHI) in Paris headed 0.2% into the red
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The pan-European STOXX 600 (^STOXX) was down 0.3%
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Wall Street is set for a muted start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all lacklustre.
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The pound was 0.1% down against the US dollar (GBPUSD=X) at 1.3311
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FARGO, N.D. – North Dakota State University’s College of Business has launched the Center for Banking and Finance, a new academic and industry‑engaged hub designed to prepare students for careers in banking and finance while supporting the evolving workforce needs of the region’s financial industry, a release states.
Announced during a press conference at NDSU’s Louise Auditorium at Barry Hall, the center brings together students, faculty and industry partners to expand experiential learning opportunities, strengthen connections to employers, and address emerging trends shaping the financial services industry. The center is housed within NDSU’s College of Business and builds on growing student interest in finance‑related programs.
“The Center for Banking and Finance reflects NDSU’s responsibility as a student‑focused, land‑grant, research university to respond to workforce and economic needs across our state and region,” said Interim President Rick Berg. “By connecting education, industry, and community, this center helps ensure our graduates are prepared to contribute on day one and throughout their careers.”
The center will support undergraduate and graduate students through hands‑on learning experiences, exposure to financial tools and technologies, and direct engagement with financial institutions, regulators and business leaders. It will also serve professionals already working in banking and finance through workshops, training and research‑informed programming aligned with business needs, according to the release.
“The Center for Banking and Finance is about momentum — students who are eager to learn, faculty who are pushing applied scholarship forward, and industry partners who want to shape the future workforce,” said Kathryn Birkeland, Ronald and Kaye Olson dean of the NDSU College of Business. “When education and industry move together, everyone benefits.”
The launch of the Center for Banking and Finance coincides with a series of regional events focused on finance, fintech and economic outlook, including programming with the Bank of North Dakota, the Federal Reserve Bank of Minneapolis and regional business leaders. Together, these events underscore the Fargo‑Moorhead area’s role as a hub for financial dialogue, talent development and economic collaboration.
The center’s foundational banking partners include Dacotah Bank, Gate City Bank, Bell Bank and Western State Bank, who attended the launch and are helping shape early student experiences and industry-informed programming.
The center is led by Mark Jensen, a career banker and longtime adjunct instructor who joined NDSU full-time in 2026 as director of the Center for Banking and Finance.
“The Center for Banking and Finance is designed as a bridge,” Jensen said. “It brings industry into the learning experience in meaningful ways, and it gives students clearer pathways into a wide range of banking and finance careers.”
For students, the center represents a more direct bridge between academic study and professional opportunity.
“As a finance student, experiences outside the classroom make a real difference,” said Tavian Nelson, a senior at NDSU majoring in finance. “Going into college, I knew I wanted to be involved in the finance program but was unsure of what that would look like once I graduated. The school has truly shaped my desired career outcomes with many hands-on experiences, professional leaders, and connections throughout my time here. This center will truly strengthen these experiences for students.”
Initially, the center will focus on experiential learning opportunities, business partnerships and workforce‑aligned programming, with plans to expand offerings as partnerships and resources grow. The center is supported through external funding and business engagement.
FRANKFURT, March 26 (Reuters) – Euro zone banks have limited direct exposure to the war in the Middle East, but the conflict could still generate systemic stress given interconnected vulnerabilities, European Central Bank Vice President Luis de Guindos said on Thursday.
Financial markets have come under stress in recent weeks from the impact of the U.S. and Israeli war on Iran, but the selloff outside the Middle East has been limited, even as some assets remain overvalued.
“Spillovers to the euro area financial sector have so far remained contained,” de Guindos said in a speech. “Direct bank exposures to the region are limited, and the banking system is well positioned with strong profitability and robust capital and liquidity buffers.”
De Guindos argued that even market infrastructure operators, like central counterparties whose services include energy markets, have managed margin requirements effectively, despite the volatility.
Still, there was a broader risk, given interconnections in the financial system, said de Guindos, whose roles at the ECB include monitoring financial stability.
“Amid already elevated global uncertainty, this conflict could trigger the unravelling of interconnected vulnerabilities and cause systemic stress,” he said.
The conflict threatens to derail market sentiment at a time when asset valuations are high, potentially leading to a sharp repricing of risk for leveraged borrowers and sovereigns while amplifying stress in the non-bank financial sector, he said.
On the ECB’s core mandate of ensuring low inflation, de Guindos repeated the bank’s warning that inflation could rise and growth slow on the conflict but argued more time was needed to understand the full impact.
“We are unwavering in our commitment to ensuring that inflation stabilises at our 2% target in the medium term,” he said.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
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