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Xiao Yanyan, Jin Shi Data
Minneapolis Fed President Neel Kashkari said he had previouslyHe did not support the Fed’s last rate cut, but he has yet to make a decision on the best path of action for the December policy meeting..
“A lot of the on-the-ground evidence and data showed me that the inherent resilience of economic activity exceeded my expectations,” Kashkari said in an interview with Bloomberg News on Thursday.He pointed out that this was the reason why he advocated a pause in interest rate cuts at the Fed’s October meeting.
Kashkari said data released since then continued to point to a “continuation of the same trend” in the economy.Regarding the interest rate decision-making meeting to be held on December 9th and 10th, he said frankly: “Depending on the trend of the data, I can put forward arguments for cutting interest rates, or I can put forward reasons for holding back. It all remains to be seen.”
This statement makes Kashkari join the ranks of many Fed officials who have doubted the need for a rate cut in December or explicitly opposed it in recent days.It’s unclear whether they can convince enough voting members of the Federal Open Market Committee (FOMC), as many policymakers are still more worried about the weakness in the labor market.Although the head of the Minneapolis Fed does not have a vote on interest rate decisions this year, he still participates in FOMC policy discussions.
Financial markets have taken note of the Fed’s so-called“Inflation Hawks”Recent intensive vocal trends.According to the federal funds futures contract, investors have lowered the probability of a rate cut in December to about 47%.Before the October Fed meeting, the market’s expected rate cut probability was as high as 100%.
After the Federal Reserve implemented its first interest rate cut this year in September, Kashkari predicted two more interest rate cuts in 2025.He revealed on Thursday that he believed the economic slowdown had become more obvious at the time.
“There are endless negative news about low-income borrowers – subprime borrowers and subprime companies serving the subprime market are in trouble, which seems to show that there is indeed partial weakness in the labor market.” He analyzed, “But at the same time, most corporate financial reports have performed solidly, and many companies are optimistic about the prospects for 2026.”
Kashkari is not alone in wanting more data before his final policy meeting at the end of the year.San Francisco Fed President Daly also expressed uncertainty about the direction of action at this meeting early on the same day.”It’s too early to say ‘no rate cut’ or ‘definitely a rate cut,'” Daley told an event in Dublin, adding that the direction of policy change now looked “neutral.”
However, some officials have expressed their stance on the year-end meeting, and more and more officials advocate maintaining interest rate stability.
Harmack stresses interest rates should continue to curb economy
Cleveland Fed President Harmack said,The Fed should keep interest rates stable to continue to curb inflation.
“Overall, we need to maintain somewhat restrictive policies and continue to apply pressure to get inflation back to target,” Hammaker said during a fireside chat at the Economic Club of Pittsburgh on Thursday.
Hammaker reiterated his views earlier in the day, noting that while he was concerned about labor market conditions, high inflation persisted, particularly affecting low- and middle-income households.
Federal Reserve officials lowered the benchmark interest rate to a range of 3.75%-4% last month, close to or reaching a level that some policymakers estimate will “no longer constrain the economy.”But Hammaker believes current rates are “quite restrictive, if at all.”, and revealed that her forecast for the so-called neutral interest rate is at the top of the forecast range of 19 Fed officials.
“To maintain the restrictive stance of policy, we need to keep interest rates near current levels.” She stressed.
Hammaker expects inflationary pressures to continue through the end of this year and into early next year.She pointed out that companies have so far absorbed the cost of inflation caused by large amounts of tariffs, but are now looking for ways to pass on cost increases to consumers.
The hawkish camp continues to expand
Boston Fed President Susan Collins said on Wednesday,Interest rates should stay at current levels ‘for some time’, to strike a balance between 3% inflation and weak hiring in the labor market.Inflation is still above the Fed’s 2% target.She pointed out that still strong economic growth may slow or even hinder the process of cooling inflation.
Even officials who have been more vocal in supporting rate cuts in the past, including Chicago Fed Presidentgoolsbyet al., have expressed similar sentiments in recent weeks.They are joining a more hawkish camp at the Fed that includes Kansas City Fed PresidentSchmid, President of the Cleveland FedHamakand Dallas Fed PresidentLoganThese officials, among other policymakers, have warned against another rate cut.
At the same time,Fed Governors Milan, Waller and Bowman advocated lowering interest rates.Milan, the latest Fed official appointed by Trump earlier this year, said better-than-expected inflation data provided support for lower interest rates.
Federal Reserve officials will regain updated information on the state of the U.S. economy as the government shutdown ends and the agency resumes releasing official statistics.But it’s unclear how much new data will be available in time for the December meeting.
There may be more objections at the December meeting
Regardless of what decision is made in December, Fed Chairman Powell is likely to face a more fierce opposition than last month’s two dissenting votes – when Kansas City Fed President Schmid opposed further easing due to high inflation, while Fed Governor Milan believed that inflation was falling faster than generally recognized and advocated a more aggressive 50 basis point interest rate cut.
Since then, many of the 12 Fed policymakers with voting rights on interest rates have expressed caution about further cutting interest rates.St. Louis Fed President Mussallem reiterated on Thursday that monetary policy needs to “reversely suppress” inflation, while Fed Vice Chairman Jefferson emphasized the need to maintain a prudent pace during the official data vacuum period..
Non-voting policymakers, including Atlanta Fed President Bostic and Cleveland Fed President Hammaker, have also expressed a preference for keeping interest rates steady.
“Boston Fed President Collins’s clear opposition to a December rate cut intensifies our concerns about Powell’s ability to manage disagreements within the FOMC and also creates more uncertainty about the path of interest rates.” Evercore ISI Vice Chairman Krishna Guha wrote in a report on Thursday.
He pointed out that if the Fed insists on cutting interest rates, Collins, Musallem, and even Chicago Fed President Goolsby or Fed Governor Barr may vote against it like Schmid; if the interest rate remains unchanged, Milan’s objection may be echoed by the other two Trump-appointed Fed governors Waller and Bowman.
