Fed Hawks Push Back on Rate Cuts, Cite High Inflation and Strong Jobs Market
Two regional Federal Reserve officials voiced sharp opposition on Friday to the central bank’s latest interest rate cut, arguing that inflation remains too high and the U.S. labor market does not require additional support.
The comments from Dallas Fed President Lorie Logan and Kansas City Fed President Jeffrey Schmid highlighted growing internal tension within the Fed over the direction of monetary policy. Their remarks also signal that the bar for another rate cut in December is now considerably higher unless the economy weakens significantly.
Logan: No Need for Another Rate Cut
“I did not see a need to cut rates this week,” Logan said during a Dallas Fed banking conference. “And I’d find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labor market will cool more rapidly.”
It’s unusual for Fed policymakers to outline their positions so directly ahead of a rate-setting meeting. On Wednesday, the Federal Open Market Committee (FOMC) voted 10–2 to lower the benchmark interest rate to a range of 3.75%–4.00%.
Fed Chair Jerome Powell cautioned afterward that another reduction in December was “not a foregone conclusion.” Logan’s remarks echoed that view, suggesting that the Fed should stay cautious.
While Logan acknowledged potential downside risks to the labor market — such as layoffs, market volatility, or a prolonged government shutdown — she said those threats can be monitored and addressed if they materialize. For now, she argued, they do not justify further preemptive easing.
She added that inflation remains too high and is not falling quickly enough toward the Fed’s 2% target. Logan does not currently hold a voting seat on the policy committee.
Schmid: Economy Still Has Momentum
Jeffrey Schmid, who voted against this week’s rate cut, shared similar views in a written statement. He said the U.S. economy remains resilient, supported by strong consumer spending and steady business investment.
“The labor market appears balanced,” Schmid said, adding that any weakness likely reflects long-term structural factors — such as demographic shifts and technological changes — rather than a slowdown in demand.
He also warned that cutting rates further could undermine confidence in the Fed’s inflation-fighting credibility, especially if markets begin to doubt its commitment to maintaining price stability.
Schmid’s dissent followed that of Fed Governor Stephen Miran, who favored a larger 50-basis-point cut instead of the 25-point reduction approved this week.
Markets Still Expect Another Cut in December
Following Powell’s cautious remarks, financial markets scaled back expectations for another move in December. However, futures data still suggest a two-to-one probability that the Fed will trim rates by another quarter-point at its final meeting of the year.
Despite uncertainty caused by the ongoing U.S. government shutdown and limited access to official economic data, Logan said she still has sufficient visibility into current economic conditions to assess policy risks going forward.
