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4h ago

Fed Split Widens After Rate Cut as Powell Says December Move Is Uncertain

Regional leaders now argue inflation is too high to ease further, highlighting a debate complicated by a shutdown-driven data blackout.

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Federal Reserve Bank of Dallas President Lorie Logan speaks at a conference of the National Association for Business Economics in Dallas, Texas, U.S., October 9, 2023. REUTERS/Ann Saphir
Inflation still too high — fed's jeff schmid explains his vote not to cut rates this week

Overview

  • Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack said they would have preferred to hold rates steady and signaled resistance to another cut in December.
  • Kansas City Fed President Jeffrey Schmid published his dissent against this week’s reduction, citing still-elevated inflation and ongoing economic momentum.
  • Chair Jerome Powell cautioned that a December rate cut is not a foregone conclusion, prompting futures to trim the odds of another move to about 66% and pushing Treasury yields higher.
  • The Federal Reserve lowered the federal funds target by 25 basis points to 3.75%–4.00% in a 10–2 vote, with Schmid opposing any cut and Governor Stephen Miran favoring a larger half‑point reduction.
  • Policymakers also said balance‑sheet runoff will end on Dec. 1, even as the government shutdown’s halt of official data releases forces heavier reliance on private indicators and market signals.