Philadelphia Fed President Anna Paulson said overnight that she is approaching the December FOMC “cautiously,” highlighting a delicate balance between a cooling but still-stable labor market and inflation that remains above target.

The delayed September jobs report was “encouraging,” she said, as it showed the rise in unemployment to 4.4% was largely consistent with softer labor supply, not a collapse in demand. That leaves the job market broadly in equilibrium.

Paulson stressed that the Fed must recognize how its easing cycle compounds over time. “Each rate cut raises the bar for the next cut,” she noted, because every move lowers policy closer to the point where it stops restraining the economy and begins actively stimulating it.

Regarding inflation, Paulson reiterated that tariffs are unlikely to generate sustained price pressures. The bigger driver remains moderating demand, which is helping contain inflation even as it remains above the 2% goal for what will likely be five consecutive years.

Chicago Fed President Austan Goolsbee struck a cautious tone overnight, warning that the central bank itself risks “front-loading too many rate cuts” before it has enough information to judge whether inflation is truly easing again. He stressed that his concern is not about the Fed’s destination — he still believes rates “are going to go down” over the medium term — but rather about the wisdom of easing too quickly in the short run given the recent inflation uptick.

Goolsbee said he remains uneasy about rising services inflation based on the data published before the government shutdown. He emphasized that the absence of fresh, reliable inflation readings has left policymakers with limited visibility, noting there are few credible private sources to bridge the gap created by missing official data.

Cleveland Fed President Beth Hammack made it clear today that she sees significant risks in cutting interest rates further while inflation remains above target. Easing policy to cushion the labor market, she argued, risks “prolonging this period of elevated inflation” and could further fuel “risk-taking” in an already buoyant financial environment.

With stock prices firm and credit flowing freely, financial conditions are “quite accommodative,” she noted, making additional monetary support potentially counterproductive.

Hammack also warned that lowering short-term borrowing costs could distort asset pricing and credit risk signals. Such distortions, she said, might leave the economy exposed to a sharper downturn late.

She pushed back against the idea that a rate cut would act as “insurance” for the labor market, saying policymakers must recognize that such insurance could come “at the cost of heightened financial stability risks”.

The October FOMC minutes revealed a deep policy split, and “strongly differing views”, showing officials wrestling with how quickly to bring rates toward neutral. While the majority continues to expect additional easing “over time,” many expressed reluctance to cut again in December, marking a more hawkish tone than markets had priced in. Traders reacted swiftly, pushing the probability of a December rate cut down to roughly 33%, compared with near 50% earlier in the week.

Participants were divided across a wide spectrum of views. Several argued that economic conditions would justify another quarter-point reduction at the next meeting “if the economy evolved about as they expected over the coming intermeeting period.”

However, “many participants” judged that keeping rates “unchanged for the rest of the year” would be more “appropriate” under their baseline outlooks. Others supported further easing but emphasized that December may not necessarily be the right moment.

The Committee delivered its second straight cut in October, moving rates to 3.75–4.00%, but Chair Jerome Powell emphasized at the press conference that another move in December was “not a foregone conclusion.” The internal debate documented in the minutes supports that caution and signals stronger resistance to front-loading additional cuts.

Full FOMC minutes here.

Richmond Fed President Thomas Barkin said the U.S. central bank is facing pressure on both sides of its mandate, with inflation still above target and job growth clearly slowing. However, he noted that the picture is not one-directional, as consumers are increasingly resisting price increases while a contraction in labor supply has kept the unemployment rate stable.

Barkin described the Fed’s current environment as akin to “docking a boat at night without a lighthouse,” highlighting the difficulty of judging policy in the absence of timely government data during the shutdown. The upcoming release of delayed reports, he said, will offer much-needed clarity on both inflation and labor market dynamics.

“I think we have a lot to learn between now and then,” Barkin added, suggesting that the December decision remains highly data-dependent as policymakers wait for the first full set of figures since the government reopened.