Federal Reserve officials were widely divided at their meeting last month when they decided to cut rates for the first time in a decade, with some arguing for a bigger reduction while others insisted the Fed should not cut rates at all.
The minutes of the July 30-31 discussions released Wednesday show that two officials believed the Fed should cut its benchmark policy rate by a half-percentage point, double what the central bank eventually agreed upon. On the other end, some Fed officials argued for no rate cut at all, believing the economy was beginning to improve after a soft patch in the spring.
The minutes did not indicate any consensus on future reductions.
Financial markets have been turbulent since the July 31 rate cut, diving 800 points one day last week on the Dow Jones Industrial Average, as bad news has piled up in terms of the slowing global economy and the latest developments in President Trump’s trade war with China. The major US indexes were up less than 1 percent Wednesday.
Because of these developments, investors have become convinced the central bank will follow up the July rate cut with further cuts at coming meetings. But economists are not so sure, believing the Fed may want to save some of its ammunition should the economy take a serious turn for the worse with the possibility of a recession.
The minutes provided little clarity on what the future for rates will be, but markets are hoping Fed chairman Jerome Powell will send a stronger signal when he delivers the keynote address at the Fed’s annual policy conference in Jackson Hole, Wyo., on Friday.
‘‘There is little sign that the Fed is willing to push back on the markets,’’ said Michael Pearce, senior economist at Capital Economics. ‘‘As such, another [quarter-point] cut in September still looks like a good bet, if only because the Fed will not want to disappoint lofty market expectations.’’
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The two Fed officials who argued for a bigger rate cut ‘‘favored a stronger action to better address the stubbornly low inflation rates of the past several years,’’ the minutes said.
The July action was approved on an 8-2 vote, with Esther George, president of the Fed’s Kansas City regional bank, and Eric Rosengren, president of the Boston Fed, dissenting and arguing there should be no rate cut at all.
The minutes said the majority view supported a quarter-point cut, viewing it as a ‘‘mid-cycle adjustment,’’ a phrase Powell used in his remarks after the vote.
The minutes highlighted three main reasons for the cut, including recent signs of deceleration of the economy and concerns about persistently low inflation. Officials also believed a rate cut would be a ‘‘prudent step from a risk-management perspective.’’
The minutes said the Fed was worried about a slowdown in business investment and the global headwinds that are affecting Europe, Japan, and other regions.