Two Federal Reserve officials who dissented at this week's policy meeting clarified their positions on Friday, stating they would have preferred to hold rates steady at the final meeting of the year.
Chicago Fed President Austan Goolsbee said he opposed this week's rate cut because he wanted to wait for more inflation data before considering further easing. "Waiting until next year poses little additional risk while providing the benefit of updated economic data we currently lack," Goolsbee said in a statement. He maintained an "optimistic" outlook for "significant" rate cuts next year.
Kansas City Fed President Jeffrey Schmid, who has now dissented twice consecutively, said his outlook remains unchanged. He views inflation as still too high, with the economy maintaining growth momentum and balanced labor markets despite some cooling. "What I see today is an economy with growth momentum and elevated inflation, suggesting policy isn't overly restrictive," Schmid stated. "This led me to favor maintaining the current policy rate range."
The Fed's decision to cut rates by 25 basis points for the third consecutive time brought the target range to 3.5%-3.75%. Three dissenting votes marked the most in over six years, including Governor Michelle Bowman who preferred a 50-basis-point cut.
Goolsbee has repeatedly expressed discomfort with front-loaded easing and dismissed assumptions about transitory inflation. "Given recent years' experience, gathering more evidence is clearly the wiser choice," he said. He noted inflation progress has stalled for months, with nearly all businesses and consumers ranking prices as their top concern.
Schmid highlighted persistent inflation worries in his district, warning that significant price pressures continue influencing household and business decisions. Goolsbee cautioned that while current inflationary pressures stem mainly from tariffs and may prove temporary, risks remain of prolonged pressures and potential worsening in non-housing service inflation.
Regarding labor markets, Goolsbee described a "low hiring/low layoffs" pattern consistent with businesses navigating uncertainty rather than economic slowdown. "No signs suggest abrupt deterioration that would prevent waiting for early-year data before acting," he concluded.
Comments