Kansas City, Cleveland Fed Presidents Oppose October Rate Cut Amid Inflation Concerns

Several Federal Reserve officials have expressed concerns regarding recent interest rate cuts amid persistent inflation risks and a stable labor market. Kansas City Fed President Jeffrey Schmid dissented on the rate cut, emphasizing that inflation remains too high and widespread, and that the labor market is largely balanced, suggesting that further cuts may be unnecessary or counterproductive. Similarly, Cleveland Fed President Beth Hammack opposed the rate cut, stating that the policy is barely restrictive and inflation pressures are broad, advocating for maintaining steady rates to meet the 2% inflation target. These hawkish views reflect a broader concern that lowering rates prematurely could undermine efforts to control inflation, which remains above target despite recent cuts. The market has responded with a strengthening U.S. dollar and cautious investor sentiment, highlighting the division within the Fed about the appropriate monetary policy path. Overall, the Fed’s internal dissent underscores the complexity of balancing economic momentum with inflation control in its policy decisions.