Fed official warns inflation is still too high for more rate cuts

Core Viewpoint - Federal Reserve officials are divided on the direction of interest rates, with some advocating for cuts due to a weakening labor market, while others, like Kansas City Fed President Jeffrey Schmid, argue that inflation remains too high to justify further reductions [1][6][8]. Group 1: Interest Rate Decisions - The Federal Open Market Committee (FOMC) voted on October 29 to reduce the benchmark Federal Funds Rate target to 3.75% to 4.00%, marking a quarter percentage point cut, which is the second reduction in two months aimed at supporting a slowing labor market [9]. - Schmid, a monetary hawk, opposed the interest rate cut, arguing that inflation is still too high and that rates should be held to manage demand and reduce price pressures [7][11]. Group 2: Economic Indicators - The Consumer Price Index (CPI) for September showed a year-over-year increase of 3%, which was cooler than expected, but inflation remains above the Fed's 2% target [5]. - The most recent unemployment figure stands at 4.3%, indicating that the labor market is "largely in balance" according to Schmid [10]. Group 3: Diverging Opinions Among Officials - Fed Chair Jerome Powell acknowledged rising concerns about inflation among some policymakers, indicating that another interest rate cut in December is not guaranteed [6]. - Fed Governor Stephen I. Miran voted against the quarter percentage point cut, advocating for a more aggressive half percentage point reduction to prevent stagflation or recession [7].