Policymakers on the Federal Open Market Committee (FOMC), which guides the Fed’s monetary policy, voted 10-2 in favor of lowering the benchmark federal funds rate by 25 basis points to a target range of 3.75% to 4%. One dissenter, Fed Governor Stephen Miran, called for a larger 50-basis-point cut.<\/p>\n
The other dissenter was Federal Reserve Bank of Kansas City President Jeffrey Schmid, who said in a dissent statement that his “preference would have been to leave the target range unchanged” because the labor market is “largely in balance, the economy shows continued momentum, and\u00a0inflation remains too high<\/a>.”<\/p>\n Schmid said that in his conversations with contacts in the Kansas City Fed’s district he has heard “widespread concern over continued cost increases and inflation.”<\/p>\n FED CUTS INTEREST RATES FOR SECOND TIME THIS YEAR AMID LABOR MARKET WEAKNESS<\/a><\/p>\n Kansas City Fed President Jeffrey Schmid said that he thinks monetary policy should be tilted against inflation given the economy’s momentum. (Kent Nishimura\/Bloomberg via Getty Images \/ Getty Images)<\/p>\n “Rising\u00a0healthcare costs<\/a> and insurance premiums are top of mind. In the data, inflation is spreading across categories, both goods and services. Inflation has been running above the Fed’s 2% objective for more than four years,” he said.\u00a0<\/p>\n The Kansas City Fed chief said he thinks that monetary policy is “only modestly restrictive” at this stage, noting that activity in equity and lending markets suggests that policy isn’t particularly tight or restrictive.\u00a0<\/p>\n Furthermore, Schmid said that consumption appeared to accelerate through the summer, while\u00a0capital investment<\/a> \u2013 particularly in software and IT \u2013 has surged to historic highs despite being sensitive to interest rates.<\/p>\n POWELL WARNS SHUTDOWN IS CLOUDING FED’S VIEW OF THE ECONOMY: ‘DRIVING IN THE FOG’<\/a><\/p>\n “With inflation still too high, monetary policy should lean against demand growth to allow the space for supply to expand and relieve price pressures in the economy,” Schmid said.<\/p>\n “With the dual mandate, Congress has directed the Federal Reserve to manage the trade-offs that arise from the economy-wide constraint that ties inflation to unemployment,” Schmid said. “Constraints lead to difficult decisions over how to balance competing objectives.”<\/p>\n The Fed’s dual mandate is to promote stable prices in line with a long-run 2% inflation target as well as\u00a0maximum employment<\/a>. Risks to both of the goals have emerged in recent months.\u00a0<\/p>\n Inflation has trended higher, with the consumer price index (CPI) showing inflation rose to 3% in September in what was the highest reading since January, while monthly jobs reports showed a marked slowdown in hiring over the summer.\u00a0<\/p>\n INFLATION REMAINED WELL ABOVE THE FED’S TARGET IN SEPTEMBER AHEAD OF RATE CUT DECISION<\/a><\/p>\n Schmid said that in some circumstances the Fed’s actions could have disproportionate effects on both sides of the\u00a0dual mandate<\/a>.\u00a0<\/p>\n He noted as an example that “I do not think a 25-basis-point reduction in the policy rate will do much to address stresses in the labor market that more likely than not arise from structural changes in technology and demographics.”\u00a0<\/p>\n “However, a cut could have longer-lasting effects on inflation if the Fed’s commitment to its 2% inflation objective comes into question. In the end, inflation is the Federal Reserve’s responsibility and within its control, and as I balance the mandate \u2013 and the effectiveness of the Fed’s actions in meeting that mandate \u2013 my preference was to hold the policy rate steady,” Schmid said.<\/p>\n![\"Kansas](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/11\/kansas-city-fed-jeffrey-schmid.jpg\")
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