The members of the FOMC voted to reduce the federal funds rate target by 25 basis points bringing it down to 3.75 percent, its lowest level since early 1994. The Fed maintained its easing bias indicating their concern over economic conditions. The minutes of the May 15 meeting did reveal some dissension in the ranks. One member actually voted for a 25 basis point cut (instead of 50 basis points) at the May 15, while a few members indicated they were willing to go along with the smaller drop. This suggests that some of these members - and maybe even more - are becoming more concerned with overshooting and inciting inflationary pressures in the economy. After all, the Fed's rate cuts of the past six months have yet to take effect on the real economy. Historically, rate changes could take from 9 - 12 months to impact the real economy. Given the changing structure of the economy, it is more likely that the effects will come sooner - within 6 to 9 months. Yet, that means we are just now beginning to feel the impact of the January 3rd cut. The Fed would not be doing its job appropriately if it weren't cautious. .