Fed debated bigger rate cut, wanted to avoid appearing on path for more cuts

WASHINGTON (Reuters) – The Federal Reserve said: "The Federal Reserve is more likely to be cut off, but it's not going to be cheaper.

The U.S. central bank cut rates by 25 basis points at the close of its July 30-31 meeting, with minutes of the meeting published on Wednesday.

"A couple of participants indicated that they would have preferred a 50 basis point cut," according to the minutes, which added that policymakers favoring such a move were concerned by inflation being too low.

Since that meeting, the President of the United States, President Donald Trump on Wednesday for the Fed to slash its benchmark rate.

However, they have been told that they are planning more cuts cuts.

"Participants generally favored an approach in which it would be guided by incoming information … and that avoided any appearance of following a preset race," according to the minutes.

KEEPING FLEXIBLE

U.S. stocks held on to earnings after the minutes were released, with the S & P 500 Index .SPX benchmark up about 0.75% on the day.

"The Fed clearly wants to be flexible. They are clearly worried about some global developments, "said Willie Delwiche, investment strategist at Baird in Milwaukee.

Yields on long-dated U.S. Treasury securities dropped to the lows of the day. The 10-year note US10YT = RR yield slipped to 1.55%, while the 30-year bond US30YT = 2.0%, last trading at 2.02%. It fell below expectations for U.S. economic growth fueled demand for safe assets.

The dollar weakened fractionally against a basket of major trading partners' currencies.

The comments on Wednesday by Trump, who has always criticized the Federal Reserve's policies, as he seeks to downplay worries that a trade war between the United States and China could weigh on the US economy and trigger a possible recession before the November 2020 presidential election .

Minneapolis Federal Reserve Bank Chairman Neel Kashkari, who does not have a vote on the Fed's monetary policy committee to boost the economy.

The July 30-31 policy meeting also included discussion of the Fed's research into potential changes to its approach to policy setting. A number of policymakers said the Fed could have been more aggressive in the recession.

However, policymakers also said that they might be more likely to eliminate the risk of being a victim of poverty.