Minneapolis Fed President Neel Kashkari said overnight that the balance of risks in the U.S. economy has shifted, with greater danger of a labor market slowdown than of a sharp rebound in inflation. Neveretheless, he added that while policymakers may be leaning toward the view that the economy is weakening, “we’re more likely betting that the economy is really slowing more than it really is.”

Kashkari downplayed fears of inflation reaccelerating to 4% or 5%, noting that the arithmetic of tariff effects does not support such a scenario. Instead, he described the main concern as “persistence”, with price pressures potentially staying near 3% for “an extended period” rather than spiking.

He also addressed the impact of the ongoing government shutdown, saying that while the lack of official data complicates decision-making, Fed officials still have access to timely private indicators and feedback from business outreach.

“We can make our way through while the shutdown is happening,” Kashkari said. “But the longer it goes on, the less confidence I have that we are reading the economy appropriately.”

Fed Governor Christopher Waller told Bloomberg that even without the official employment data, the available evidence points to a clear slowdown in hiring across the U.S. economy. He noted that private and survey-based indicators have been consistent in signaling weaker labor demand, reinforcing the view that the job market is losing momentum.

Waller argued that this backdrop supports the case for the Fed to continue with measured 25bps rate cuts, emphasizing caution amid high uncertainty.

“We don’t know which way this is going to break,” he said. “If the labor market rebounds, there is less pressure to cut rates—you don’t want to make a mistake.”

Fed Governor Stephen Miran said today that he would support a 50bps rate cut at the upcoming policy meeting, arguing that monetary policy remains too restrictive given the heightened risks surrounding U.S.–China trade tensions.

Speaking to Fox Business, Miran said that the escalation in trade uncertainty adds downside risks to growth and that the Fed must act preemptively to cushion the economy.

“If monetary policy stays as restrictive as it is, and you have a shock like this hit the economy, it does materially increase the negative consequences of that shock,” he warned.

Miran added that the outlook for next year’s growth will depend heavily on whether trade risks are “realized or defused” in the weeks ahead.

The Fed’s Beige Book released Wednesday indicated that the U.S. economy has largely stalled, with “little change” in overall activity since the previous report. Out of the 12 regional districts, three reported slight to modest growth, five showed no change, and four signaled mild softening. While some respondents expressed cautious optimism for an uptick in demand within 6–12 months, others highlighted that persistent uncertainty and the government shutdown are weighing on business confidence and investment decisions.

Price pressures remain a key theme. The report said input costs rose at a “faster pace,” citing “tariff-induced” increases alongside higher expenses for insurance, healthcare, and technology services. While some of these cost increases have been passed on to consumers, competitive pressures are limiting full price transmission.

Labor market conditions showed no significant change, with employment levels “largely stable” and labor demand “generally muted”. Wage growth continued at a “modest to moderate pace”, but firms reported sharper increases in employer-sponsored healthcare costs, which have contributed to higher overall labor expenses.

Full Fed’s Beige Book report here.

Fed Governor Stephen Miran said today that two more interest rate cuts this year “sound realistic”, in light of continued disinflation and growing downside risks.

Speaking at a CNBC forum, he said it was now “even more urgent to get to the neutral rate quickly”, arguing that the Fed’s priority should be to adjust policy preemptively as economic risks mount.

Miran added that the balance of risks had worsened compared to just a week ago. Recent developments in U.S.–China relations could play a meaningful role in shaping the economic outlook, warning that policymakers must now “think about the introduction of a new tail risk.”

Fed Chair Jerome Powell reinforced expectations for another rate cut later this month. Speaking overnight, he said that based on available information despite government shutdown, the outlook for growth, employment, and inflation “has not changed much.”

Powell pointed out that hiring momentum has weakened, with payroll gains “slowed sharply” over the past several months. He attributed this partly to structural factors such as lower immigration and participation, which have constrained workforce growth. Even though layoffs remain subdued, Powell warned that the “downside risks to employment appear to have risen,” citing survey evidence that households see fewer job openings and firms report less hiring difficulty.

On inflation, Powell noted that price pressures remain contained. The latest surveys and data indicate that goods price increases are “primarily reflect tariffs rather than broader inflationary pressures”. While short-term inflation expectations have edged higher this year, long-term expectations remain well anchored around the Fed’s 2% target.

Taken together, Powell’s tone is balanced but leaning dovish. Fed fund futures continue to see over 90% change of another 25bps cut to 3.75-4.00% on October 29.

Full speech of Fed’s Powell here.