Fed Deepens Divide Over Rate Cuts as Dissenting Members Demand More Data

Chicago Federal Reserve President Austan Goolsbee stated he voted against a recent rate cut because he wants more economy-related data before easing monetary policy. Speaking on CNBC, Goolsbee expressed discomfort with “front-loading too many rate cuts” while inflation remains stubbornly above the central bank’s 2% goal and recent economic indicators show “no progress” for months.

With the government shutdown delaying key economic reports, Goolsbee said policymakers should have waited for clearer evidence before cutting rates again.

“I’m pretty optimistic that for 2026 rates will be able to be a fair bit lower than they are today,” Goolsbee said on “Squawk Box.” But he added that the Federal Reserve shouldn’t assume inflation will fade on its own.

“I just want to make sure that if we believe this is transitory, let’s not put all our eggs in one basket,” he said.

Goolsbee was one of three officials to dissent as the Federal Open Market Committee voted to cut rates by a quarter-point, lowering the benchmark rate to a range of 3.5% to 3.75%, marking the third consecutive reduction. Two dissenters, including Goolsbee and Kansas City Federal Reserve President Jeffrey Schmid, preferred holding rates steady.

Federal Reserve Governor Stephen Miran, a Trump appointee, favored a bigger half-point cut.

In a post on the Chicago Fed’s website, Goolsbee stated that the prudent move would have been to “wait for more information,” especially on inflation. He noted prices have been above target for “four and a half years” and remain a top concern for businesses and consumers he hears from across the Midwest.

Schmid echoed this warning in his own statement, arguing that “inflation remains too high,” the economy still shows momentum, and policy is only “modestly, if at all, restrictive”—a direct pushback against calls for quick and aggressive easing.

The dissents highlight a growing split within the Federal Reserve between members worried about inflation becoming entrenched—particularly services inflation—and others concerned that the labor market is weakening beneath headline numbers.

Fed Chair Jerome Powell has suggested job gains could be revised downward, an uncertainty Goolsbee acknowledged while arguing other indicators such as layoffs and unemployment have been “pretty stable.”

The Fed signaled it may pause further rate cuts in coming months, with officials projecting only one cut next year. This stance could frustrate President Donald Trump, who has called for sharper reductions in borrowing costs.

Trump has also indicated he might name a new Federal Reserve chair to replace Powell when his term ends in May.

Even within the Trump economic circle, patience is emphasized. In recent interviews, top economic adviser Kevin Hassett declined to specify how many cuts he supports, stating policymakers must “watch the data.”