Central bankers weigh inflation risks and labor market signals ahead of next move
Federal Reserve officials signaled uncertainty over whether another interest rate cut would be warranted at the December meeting, as policymakers grappled with persistent inflation, a cooling labor market, and a lack of official economic data due to the ongoing government shutdown.
San Francisco Fed president Mary Daly, speaking at the Forum Club of the Palm Beaches, said she backed last week’s quarter-point cut but would keep an “open mind” about further action.
“I thought it was appropriate to take another bit off the policy rate,” Daly said, pointing to a resilient economy and inflation running above the Fed’s 2% target.
“We need to continue to put downward pressure on inflation and keep our policy modestly restrictive, but not hold the reins so tight that we injure the labor market unnecessarily and give people lower inflation but fewer jobs. So that was a balanced decision,” she said.
Federal Reserve governor Stephen Miran reiterated his call for a 50 basis point rate cut in December, warning that keeping policy too tight could trigger an economic downturn. https://t.co/deDGtzXdYB
— Mortgage Professional America Magazine (@MPAMagazineUS) November 3, 2025
Chicago Fed president Austan Goolsbee echoed the uncertainty, telling Yahoo Finance he was “undecided going into the December meeting.”
Goolsbee, who voted for the recent cut, said, “I am nervous about the inflation side of the ledger, where you’ve seen inflation above the target for 4.5 years and it’s trending the wrong way.”
He noted that core inflation over the past three months has been running at 3.6% on an annualized basis, with core services inflation closer to 4%.
“If we’re just counting on that to go away because it’s transitory, that makes me uneasy,” Goolsbee said.
He added that the unemployment rate, at 4.3%, has remained stable, but warned, “If the job market starts to deteriorate in a more significant way, then that would change the balance of risk.”
Fed governor Lisa Cook, in her first policy speech since a high-profile legal battle with the Trump administration, also supported the recent rate reduction but stressed that the path ahead was data-dependent.
“Every meeting, including December’s, is a live meeting,” Cook said at the Brookings Institution.
“I viewed that decision as appropriate, because I believe that the downside risks to employment are greater than the upside risks to inflation.”
Cook highlighted the need to monitor the effects of tariffs and inventory adjustments, and flagged that the lack of official data complicates the outlook. “There’s a lot to anticipate with the December meeting coming up,” she said.
Cook’s remarks came amid the ongoing litigation with former President Donald Trump, who attempted to remove her from office earlier this year on accusations related to mortgage fraud.
While White House officials alleged Cook lied on federally guaranteed home mortgage forms, no charges have been brought and Cook has cited “clerical errors” in the applications.
Courts have so far blocked Trump’s efforts, with the case widely seen as a pivotal issue for central bank independence. Despite the legal turmoil, Cook has continued her duties at the Fed, emphasizing a data-driven approach to monetary policy.
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