Powell says Fed officials deeply split on December rate cut

Federal Reserve Chair Powell says there are “strongly differing views” among officials over whether to cut interest rates in December

Federal Reserve Chair Jerome Powell said on Wednesday that policymakers have “strongly differing views” over whether to cut interest rates in December, adding that current data point to moderate US economic growth.

Speaking at a press conference following the Fed’s policy meeting, Powell said available indicators suggest the economy continues to expand at a moderate pace, though pre-shutdown data showed signs of stronger growth. He noted that the recent government shutdown is expected to have only a temporary effect on activity.

Powell cautioned that the latest figures indicate little change in overall expectations and stressed that a December rate cut “is not a foregone conclusion.” He said there are “strongly differing views” among officials over the outlook for that meeting.

The Fed chair added that policymakers have not received government data for four weeks due to the shutdown, but remain capable of tracking underlying shifts in the economy. Current information, he said, points to a weakening labor market, with both layoffs and hiring at low levels. However, downside risks to employment have risen recently.

Powell said economic growth appears somewhat stronger than expected and that Wednesday’s rate cut was aimed at managing risks and bringing monetary policy closer to a neutral stance.

He added that ending the Fed’s asset reduction program gives markets time to adjust and that officials will continue monitoring the economy through unofficial sources. However, the lack of detailed data means the central bank will not have a full picture of conditions.

Powell warned that a sharp rise in uncertainty could influence the December decision. Excluding the impact of tariffs, he said, inflation would not be far from the Fed’s 2% target.

He noted that spending on US data centers is relatively insensitive to interest rates, and that the Fed is watching layoff announcements from Amazon and other firms, though these have not yet shown up clearly in jobless claims data.

Some policymakers, Powell added, are calling for patience and a careful assessment of risks before making the next move.