Many officials at the Federal Reserve did not think the central bank should lower interest rates in December when they voted for a second cut last month, according to minutes from October’s meeting.
The record of the latest gathering, released on Wednesday, highlighted a divide that has only deepened since officials opted for a quarter-point cut that brought interest rates down to a range of 3.75 percent to 4 percent. Some policymakers who supported the reduction could have also supported the Fed standing pat, the minutes said.
October’s decision featured a rare two-way dissent. Stephen I. Miran, whom President Trump recently picked to join the Fed’s board of governors, again voted for a larger, half-point reduction and Jeffrey R. Schmid, president of the Federal Reserve Bank of Kansas City, voted against any move at all. It was the third meeting in a row in which the interest rate decision was not unanimous.
At a news conference after the meeting, Jerome H. Powell, the Fed’s chair, was unexpectedly candid about how splintered officials had become. He even went so far as to say that a reduction at the Dec. 9-10 meeting, which up until then was seen as a done-deal, was not a “foregone conclusion.”
Rather, Mr. Powell said, there were “strongly differing views” about not only the economic outlook but also the degree to which officials felt comfortable tolerating either the risk of inflation staying elevated or the labor market buckling under pressure.
If the Fed does not cut interest rates next month, that will surely inflame tensions with President Trump, who has repeatedly lambasted Mr. Powell and attacked the politically independent central bank for not lowering borrowing costs as swiftly as he would like. On Wednesday, Mr. Trump revived a threat to remove Mr. Powell before his term ends in May, saying that he would “love to fire his ass.”
The minutes on Wednesday shed greater light on the nature of the debate and the sticking points that have kept officials at odds with one another even as the December decision draws nearer.
The core of the disagreement revolves around how to balance a labor market that has started to show some signs of strain against inflation, which has gained momentum because of Mr. Trump’s tariffs and moved even further from the Fed’s 2 percent target.
Some officials appear more inclined to look past the temporary price pressures stemming from tariffs and assume that, over time, their impact will fade. Instead, they harbor much greater concern about companies pulling back on hiring and the prospects of unemployment spiking.
In a separate camp sit officials who worry far less about the slowdown in monthly jobs growth, which they believe is a function of a reduction in the supply of available workers as a result of Mr. Trump’s immigration crackdown. They do not believe interest rates are weighing too heavily on economic growth and instead believe that the Fed should be far more focused on the fact that inflation has remained stuck above the central bank’s target for nearly five years.
New economic data typically plays a pivotal role in helping to resolve outstanding differences between officials and has proved crucial for allowing Mr. Powell to forge broad support for policy decisions. But the recent government shutdown, which stretched on for over 40 days and was the longest on record, has upended the release of a range of monthly reports, including those tracking payrolls growth and inflation. That has meant the Fed has not had a clear view of how the economy is faring since August.
The government data drought will start to ease this week, with September’s jobs report released on Thursday and another metric tracking prices for that month for goods and services that companies use to make products out the next week. The Bureau of Labor Statistics, the agency responsible for collecting the data and publishing its findings, said on Wednesday that it was delaying the release of the November jobs report to Dec. 16, roughly a week after the December interest rate decision. The agency said it would also publish part of October’s jobs report at that point.
The lack of government data was flagged in October’s minutes, with officials XXX
Without important data in hand, the December decision looks even more uncertain than it did just a few weeks ago. Several policymakers have already made clear that they do not think the Fed should cut at that point.
That includes Mr. Schmid, who again will cast a vote next month as part of the 12-person Federal Open Market Committee, as well as Lorie K. Logan, president of the Federal Reserve Bank of Dallas and Beth M. Hammack of the Cleveland Fed. Both Ms. Logan and Ms. Hammack will not vote on policy until next year. The Minneapolis Fed’s president, Neel T. Kashkari, will also join the policy-setting committee next year and recently said he did not support October’s cut and was hesitant about December.
Austan D. Goolsbee of the Chicago Fed and Susan M. Collins of Boston’s, both of whom are voters this year, also appear reluctant about reducing interest rates further.
But the case for cutting still has powerful backers. One of the most vocal supporters is Christopher J. Waller, a governor who is in the running to replace Mr. Powell as Fed chair. In a speech this week, Mr. Waller emphasized that the labor market was near “stall speed” and that inflation concerns were overblown.
Other policymakers who have recently emphasized their concern about the labor market include Philip N. Jefferson, the vice chair, Michelle W. Bowman, another governor, and John Williams, president of the New York Fed and an ally of Mr. Powell’s.
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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