The Federal Reserve on Wednesday slashed interest rates by a quarter point even as officials remain conflicted over whether to prioritize stubborn inflation or weakness in the labor market.
Although they did not reach a full consensus, central bankers lowered rates to a new range of 3.5% to 3.75% as they remain more concerned about underlying strain in employment.
Austan Goolsbee and Jeffrey Schmid opposed the cut, while Stephen Miran voted for a half-point cut.
A mixed bag of data has shown inflation stubbornly above the Fed’s 2% goal, and while employers added outsize jobs in September, a prolonged hiring freeze pushed the unemployment rate to its highest level since October 2021.
The record-breaking government shutdown halted data collection, causing delays in the release of key economic reports. October’s unemployment rate, meanwhile, will never be published.
Meanwhile, dissent has emerged among the Fed board members as some remain more concerned by inflation and others vouch for the labor market. Policymakers have not reached a full consensus since their July meeting.
During the previous interest-rate vote in September, Miran, President Trump’s former advisor, pushed for a more aggressive half-point cut.
Schmid, president of the Kansas City Federal Reserve, also opposed the decision, though he advocated for rates to remain unchanged.
President Trump is reportedly slated to start his final round of interviews this week for a new Federal Reserve chairman to replace Jerome Powell.
White House economic advisor Kevin Hassett is largely viewed as the frontrunner.
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