Fed Officials Split Over Risks to U.S. Economy

Federal Reserve officials — including two who will become voters in 2026 — offered sharply opposing views on what to do with interest rates, continuing a debate that is expected to grip the U.S. central bank into the new year, Jonelle Marte, Catarina Saraiva and Enda Curran reported for Bloomberg News.

Dissenting votes against the decision to cut rates indicated that the string of cuts has become increasingly contentious amid lingering inflation. (Photo: Board of Governors of the Federal Reserve System Facebook) 

Three policymakers focused their comments on inflation risks, though one suggested he was advocating only a temporary pause in rate cuts to confirm that inflation is subsiding.

Two others emphasized risks to the labor market instead.

The remarks were the first since Wednesday, when the Fed cut its benchmark rate by a quarter percentage point for a third consecutive meeting in response to rising unemployment.

Dissenting votes against the decision indicated that the string of cuts has become increasingly contentious amid lingering inflation, while projections showed the median official expects just one rate reduction in 2026.

“Part of the committee would prefer to be more cautious. They want to see more data on inflation, more data on the labor market,” said Marco Casiraghi, a senior economist at Evercore ISI.

With a new Fed chair expected to push for lower rates, “it’s going to be a bit of a bargaining process over how many cuts might be reasonable in 2026,” he said.