(Yahoo! Finance) - Two Federal Reserve officials who dissented at this week’s central bank policy meeting laid out their cases Friday for why they would have preferred to keep rates unchanged in the year's final meeting this week.
Chicago Federal Reserve president Austan Goolsbee said Friday that his vote against the Federal Reserve's decision to lower interest rates this week resulted from his preference to wait for more data on inflation before another cut.
“Waiting to take this matter up in the new year would not have entailed much additional risk and would have come with the added benefit of updated economic data which have been absent lately,” Goolsbee said in a statement.
Goolsbee added he remains “optimistic” that rates can come down a “significant amount” over the next year.
Kansas City Fed president Jeff Schmid, who dissented for the second policy meeting in a row, said Friday his outlook has not changed and that he believes inflation remains too high, as the economy shows momentum and the job market, though cooling, remains in balance.
“Right now, I see an economy that is showing momentum and inflation that is too hot, suggesting that policy is not overly restrictive,” Schmid said in a statement. “With this assessment, my preference was to leave the target range for the policy rate unchanged at this week’s meeting.”
Fed governor Stephen Miran also voted against Wednesday's action, voting in favor of a 0.50% rate cut. Three dissents on the FOMC marked the most in over 6 years.
At the end of its two-day meeting, the Fed voted to cut rates by 0.25% for the third straight time, bringing rates to a range of 3.5%-3.75%.
Goolsbee has repeatedly said he’s uneasy about too heavily front-loading rate cuts, and just assuming that inflation will be transitory. “Given the last several years, getting more evidence first feels like the wiser choice,” he said.
Schmid added that he continues to hear concerns about inflation in his district, and that his conversations suggest we’re at risk of moving toward a situation where inflation materially enters into the decisions of households and businesses.
In Friday's statement, Goolsbee said he prefers to gather more data on inflation, given that progress in bringing down inflation has stalled for several months and almost all the businesses and consumers he has spoken to cite prices as a primary concern.
Goolsbee also warned that while inflation pressures are mainly coming from tariffs and may prove transitory, there is a risk that they prove longer lasting or that inflation in non-housing services remains too high or worsens.
On the labor market, Goolsbee characterized the job market as moderately cooling and as a “low hiring/low-firing” environment, which is more consistent with businesses dealing with continued uncertainty than with an economic slowdown.
“There is little to suggest a deterioration of the labor market so rapid that we could not have waited for the data to come in the early months of next year before deciding to act,” he said.
By Jennifer Schonberger - Senior Reporter
