It is two days after the FOMC rate decision where the voting members decided by a 9-3 vote to cut rates by 25 basis points with 2 voting to keep rates unchanged and 1 (Miran) voted for a 50 basis point cut. Miran. Fed’s Goolsbee and Paulson are out with comments as to their choices and whys.
Austan Goolsbee (Chicago Fed President)
Summary: Goolsbee explained his dissent against the recent rate cut, arguing for a more patient approach. He emphasizes that the economy is stable enough to wait for more data, especially given that inflation has been stuck above target for years. He warns against “front-loading” cuts when inflation risks persist, suggesting that waiting until early 2026 would have been the prudent, lower-risk path.
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Waiting would also have provided the benefit of updated economic data.
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Dissented over the rate cut because of the belief that the Fed should wait for more information, particularly about inflation.
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Little to suggest the labor market is decaying so fast that the Fed could not have waited until early 2026 to cut rates again.
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Inflation has been above target for four and a half years, progress has stalled, and businesses and consumers cite prices as a main concern.
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Higher current inflation may have come from tariffs and prove transitory, but the danger is that it proves more long-lasting.
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Waiting would have been the more prudent course and would not have entailed much additional risk.
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Most data show stable economic growth with the labor market only moderately cooling.
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Still optimistic that rates can come down a significant amount over the next year, but concerned about front-loading given the inflation of the last several years.
Anna Paulson (Philadelphia Fed President)
Summary: Anna Paulson (Philadelphia Fed Pres.) strikes a slightly different tone, focusing more on the balance between employment and inflation. She characterizes the labor market as “bending, but not breaking” and expresses greater concern for job risks relative to inflation
