As U.S. agencies began outlining plans to release economic data held up by the government shutdown, several Federal Reserve officials on Friday restated their worries about inflation, while the Fed’s most dovish member argued that the available numbers still justified another interest-rate cut.
Financial markets were already making their predictions. By late Friday, short-term interest-rate futures indicated a 60% chance that the Fed would pause after cutting rates in both September and October, a shift from roughly even odds the day before, and from weeks of strong expectations for another cut following the Oct. 29 decision.
The contrasting comments from policymakers and the rapid changes in market pricing highlight how contentious the Dec. 9–10 Fed meeting could be.
Market sentiment may swing again next week as government agencies begin releasing a month-and-a-half’s worth of delayed data, and as more Fed officials — including influential dove Christopher Waller — share their views.
On Friday, Kansas City Fed President Jeffrey Schmid, Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack reiterated the hawkish positions they took shortly after last month’s rate cut. Hammack said it is “not obvious” that monetary policy needs to be eased further. Logan said she would find it difficult to support another cut in December without clear evidence that inflation is falling more quickly, or that the labor market is weakening beyond its gradual slowdown. Schmid said his opposition to the October cut continues to shape his thinking, arguing that further cuts would do little for the labor market and could jeopardize the Fed’s inflation goal.
By contrast, Fed Governor Stephen Miran, in two TV interviews, advocated for another cut. Miran dissented in October in favor of a larger cut and shares President Trump’s view that interest rates remain too high. He is expected to return to his role as a White House economic adviser when his term ends in January.
Fed Chair Jerome Powell has said recent rate reductions were intended as insurance against potential labor-market deterioration. But with the shutdown delaying key economic indicators, he suggested the central bank might need to slow its decision-making until the “fog” clears, noting deep divisions within the committee. A December cut, he said, is far from guaranteed.
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