We regularly provide insights into the Federal Reserve members’ policy evaluations. These assessments offer a comprehensive view of the current economy and potential future interest rate decisions. Currently, we are examining the positions of all 12 members on inflation, interest rates, and employment in detail.
Interest Rate Stances of Fed Members
The market expectations for the December interest rate decision are fluctuating. The likelihood of a rate cut started at 60% this week, dropped to 30%, and then rose to 70% today. It seems unlikely the Fed will make this decision unanimously. If the Fed members are not unified, the majority’s stance will prevail.
The hawkish members of the Fed want to maintain a rate above neutral (as some restriction is needed to lower inflation) or believe the neutral rate is higher than what the dovish members think, who want to stay closer to or below neutral.
Most Federal Open Market Committee (FOMC) members with voting rights did not support an interest rate cut in December according to October meeting minutes. We analyze each member’s position today.
Individual Perspectives
New York Fed President John Williams, overseeing the largest bank, is highly influential. He stated that interest rate cuts could occur without risking the fight against inflation.
Michael S. Barr opposes rate cuts, as expressed in public speeches on November 6 and 20, indicating a likely position against cuts in the December decision.
Bowman supports rate cuts and has advocated for additional cuts this year, suggesting she will favor cuts in December as well.
Collins warns against the dangers of further rate cuts and highlights the rising volatility and inflation risks, though remaining slightly more moderate than the other hawks.
Lisa Cook, although a target for removal by Trump, continues her role and cautions about unemployment increases despite showing readiness to act on updated inflation data.
Goolsbee, hesitant about sustaining the rate-cut cycle, expects interest rates to balance at a level significantly lower than the current rate in the long term.
Jefferson, showing neutrality, and Musalem stress caution regarding further cuts, citing economic uncertainty and labor market conditions.
Powell has yet to declare his stance for December, underlining the limited probability of additional rate cuts without sufficient supporting data.
Conclusion/Summary
Current positions: Barr, Musalem, Schmid, Goolsbee, Collins oppose cuts; Jefferson and Powell are neutral. Miran, Waller, Bowman, Williams, Cook favor cuts. If Jefferson votes for cuts, it would be 6 in favor, 5 against, with Powell undecided. A likelihood of a 7-5 favoring cuts exists unless compelling contrary data arises during the meeting.
Current expectation is 71% probability in favor of cuts. Barr, Musalem, Goolsbee, Collins will be closely watched in upcoming meetings.
