There are differences in views among Federal Reserve regional presidents regarding the policy path, with two officials believing that there is still a possibility of interest rate cuts in December

Federal Reserve officials spoke intensively on Monday.

According to Zhitong Finance APP, San Francisco Fed President Mary Daly stated that she supports the 25 basis point rate cut implemented by the Federal Reserve last week, and believes that "it is appropriate to slightly lower the policy rate further" given that inflation is still above the 2% target, but the labor market is cooling. She pointed out that U.S. inflation is currently around 3%, still above the target, but has clearly retreated; although the labor market has slowed, it is "not on the brink of collapse."

Regarding the next monetary policy meeting on December 9-10, she emphasized that she would "keep an open mind" and would assess before the meeting whether the cumulative 50 basis points rate cut this year has provided sufficient protection to the job market, or whether further easing is still needed. She also mentioned that despite the government shutdown leading to missing official economic data, the Federal Reserve can still rely on various surveys and business communication data to formulate policies, stating, "We are not flying blind."

In contrast, Chicago Fed President Austan Goolsbee released a more hawkish signal. He stated that he has not yet decided whether to support a rate cut in December, and that his threshold for a rate cut is "higher than in the last two meetings." Goolsbee noted that inflation has been above the target for four and a half years and that "the trend is still not ideal," which makes him cautious about continuing to ease policy. He acknowledged that the job market has cooled, but still believes that most indicators show labor demand remains stable.

He specifically warned that, in the context of a government shutdown, incomplete data, and unclear inflation trends, a hasty premature rate cut could result in a "policy error of jumping the gun," emphasizing that "interest rates should decline alongside inflation, not ahead of it."

Another official, Fed Governor Lisa Cook, took a more dovish stance. She stated that the December meeting remains "a meeting where a rate cut is possible," and pointed out that current inflation risks and employment risks are "rising in both directions." In her view, if rates remain too high, the labor market could deteriorate more sharply; if rates are cut excessively, it could unanchor inflation expectations.

She explained that her support for last week's 25 basis point rate cut is because the policy still has a "moderately tightening nature," and currently "employment risks have exceeded inflation risks." She also acknowledged that the data gap poses challenges, but emphasized that the Federal Reserve still has a wealth of private data and survey information sufficient to support policy research.

It is worth noting that Cook is currently embroiled in political and legal controversies. She was previously accused by the Trump administration of providing false information in mortgage applications, and Trump even announced plans to remove her from office, but that decision is currently being blocked by the courts, with the case expected to be submitted to the Supreme Court for review in January. Cook was appointed by Biden and her term runs until 2038, and she is still participating in monetary policy voting.

The market currently still expects a 50% probability of a rate cut in December, but with the absence of economic data, unclear inflation trends, and differing speeds of job market cooling, the policy outlook has become more uncertain