Divided Fed policymakers stake out positions ahead of December meeting
- A rare 10-2 policy vote at the October 28–29 meeting to cut rates by 25 basis points to the 3.75%–4.00% range revealed a deep split among U.S. Fed officials, with some pushing for tighter policy and others for looser conditions.
- Chair Jerome Powell acknowledged “strongly differing views” ahead of the December 9–10 meeting.
- Lisa Cook1, a member of the Board of the Federal Reserve, warned that keeping rates too high could sharply weaken the labour market while lowering them too much could risk unanchoring inflation expectations. This pointed to the difficulty of achieving the Fed’s dual mandate of striking a balance between inflation and employment levels and emphasised the need for close monitoring of both inflation and employment data.
- Fed Governor Stephen Miran restated his case for deeper half-point rate cuts, arguing that strong stock and credit markets don’t necessarily signal loose policy and that maintaining high rates risks a downturn. He views inflation as less threatening than his peers.
- Chicago Fed President Austan Goolsbee, while supporting the last rate cut, said he remains undecided for December and is concerned about inflation remaining above target; San Francisco Fed President Mary Daly described the October cut as “insurance”, but said further action will depend on signs of labour market deterioration.
- Both Kansas City Fed President Jeffrey Schmid and Cleveland Fed President Beth Hammack opposed the October cut. Shmid argued that inflation should remain the priority and that high equity prices suggest policy is not restrictive. Similarly, Hammack echoed that sentiment, saying monetary policy is “barely restrictive, if at all,” underscoring the sharp internal divide within the Fed.
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1 Cook is locked in a legal battle with President Trump on mortgage fraud allegations.
(Source: Reuters)