The Federal Reserve's interest rate decision last week was not as "dovish" as it first seemed, analysts at Barclays have argued.

Along with a 25-basis point reduction to the Fed's target range for rates to 4% to 4.25%, the meeting included fresh projections which showed that officials are anticipating another half percentage point in rate cuts to help stem a downturn in the labor market.

However, seven of the 19 estimates provided by policymakers in their closely-watched "dot plot" of forecasts saw fewer reductions this year, with one even calling for rates to have stayed at their prior band of 4.25% to 4.5% for the remainder of 2025.

In a note, the Barclays strategists said there were other "more hawkish messages sprinked" throughout the meeting.

The median estimate in the dot plot if one of the nine voters for three rate cuts in 2025 had changed course, they flagged. Meanwhile, two Fed Governors who had supported a rate cut in July when the Fed kept borrowing costs steady "fell in line," leaving newly-appointed Governor Stephen Miran as the sole dissenter in September.

Miran, who was hand-picked for the role by President Donald Trump, backed a deeper, half-point reduction.

Fed Chair Jerome Powell "stuck some hawkish notes" during his post-meeting press conference as well, the analysts said.

"He highlighted the risk management nature of the cut, and played down the significance of the dots," they wrote. Powell, who said officials were working to balance the twin risks of slowing employment growth and sticky inflation, could offer more comments on the rate outlook during a closely-watched speech on Tuesday.

The Barclays analysts said the rate-setting Federal Open Market Committee now has "little inclination to deviate from slow normalization" of rate policy.

However, they reiterated their prediction that the Fed will roll out two more rate cuts before the end of the year.

Source: Investing.com