WASHINGTON: Two officials who voted against the Federal Reserve’s decision to lower interest rates again this week cited a need for more economic data and too-hot inflation in explaining their decisions on Friday.
Chicago Fed President Austan Goolsbee had joined Kansas City Fed President Jeffrey Schmid in pushing to keep rates unchanged instead at the central bank’s two-day policy meeting, which ended Wednesday.
Also dissenting was Fed Governor Stephen Miran, who wanted a half-percentage-point cut, double the quarter-point reduction that most officials supported.
Analysts noted that this marks the first time the Fed has seen three dissents since 2019, underscoring tensions between the need to lower rates to boost a flagging labor market and keeping them elevated to tackle inflation.
Complicating the Fed’s job this time was a lengthy government shutdown between October and mid-November, which halted the release of fresh economic data on the state of the world’s biggest economy.
“I believe we should have waited to get more data, especially about inflation, before lowering rates further,” said Goolsbee in a statement Friday.
With Wednesday’s cut, the central bank has lowered rates thrice this year.
But Goolsbee warned that inflation has been above the Fed’s two-percent target for several years.
Divided Fed lowers rates, signals pause and one 2026 cut as growth rebounds
Further progress in cooling price hikes has also “stalled for several months” as firms and consumers grapple with higher tariffs introduced by Donald Trump since he returned to the presidency.
Goolsbee acknowledged that higher inflation could have come mainly from tariffs and be transitory, but cautioned that higher prices could prove “more long-lasting than we currently forecast.”
Miran, conversely, has called repeatedly for large interest rate cuts to help the weakening jobs market.
Goolsbee contends that the labor market was “moderately cooling,” but said it would be a “different calculation” if it were deteriorating rapidly.
In a separate statement, Schmid, who also pushed for no rate cut at the Fed’s October meeting, said: “Right now, I see an economy that is showing momentum and inflation that is too hot, suggesting that policy is not overly restrictive.”
He added that any increase in inflation uncertainty could reverse gains in this area, “potentially increasing long-term interest rates, including on US government debt.”
“Though I believe our credibility on inflation remains intact, I don’t think we can be complacent,” he said.
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