Divisions among Federal Reserve officials over whether to proceed with a December rate cut are intensifying. Recent remarks from several Fed policymakers this Thursday highlighted the split: A current voting member of the Federal Open Market Committee (FOMC) expressed unease over data gaps caused by the government shutdown, while a future voting member emphasized inflation as the more pressing threat.

Chicago Fed President Austan Goolsbee, who holds a 2023 FOMC voting seat, cautioned that the lack of critical inflation data due to the shutdown makes him hesitant about further rate cuts. He told CNBC, "With unclear data, let’s be cautious and slow down."

In contrast, Cleveland Fed President Beth Hammack, who will gain voting power in 2024, stated at a New York Economic Club event that inflation remains a more urgent concern than labor market weakness. She argued that current interest rates are "barely restrictive" and called for continued monetary pressure on inflation.

Meanwhile, New York Fed President John Williams, often seen as the Fed’s "third-in-command," suggested in Frankfurt that the era of low rates persists, estimating the neutral rate at around 1%. Fed Governor Michael Barr, a former vice chair for supervision, stressed the need to ensure labor market resilience. These mixed signals underscore deepening internal divisions ahead of the December policy decision.

**Goolsbee: Data Gaps Breed Caution** Goolsbee detailed his concerns about premature easing, citing the shutdown’s disruption to inflation metrics. While historically favoring gradual cuts, he now warns: *"If inflation flares up, we won’t see it for a while—but labor market deterioration would be immediate. That makes me uneasy about cutting rates based on transient inflation trends."*

With the Bureau of Labor Statistics canceling October’s CPI report and PCE data in limbo, Goolsbee noted core inflation at 3.6% pre-shutdown—far above the Fed’s 2% target. *"I’m not hawkish long-term, but in this fog, let’s slow down,"* he said. His voting power expires after December until 2027.

**Hammack: Inflation Trumps Labor Fears** Hammack struck a hawkish tone, projecting inflation won’t hit 2% until 2026-2027. *"Policy should remain mildly restrictive to anchor expectations,"* she asserted, criticizing last week’s 25-basis-point cut. Businesses in her district report impending price hikes, reinforcing her reliance on anecdotal data amid the shutdown.

She described the labor market as *"healthy but softening,"* with unemployment expected to rise marginally by 2026. *"As uncertainty fades, growth should rebound, easing jobless pressures,"* she added.

**Williams: Neutral Rate Stays Low** Williams reiterated that *"the low R-star era persists,"* pegging the neutral rate near 1%—or even 0.5% under certain conditions. He emphasized real-time data over theoretical estimates for policymaking.

**Barr: A Two-Speed Economy** Barr highlighted widening disparities between top 40% earners and others, calling it *"a two-speed economy where affluent households thrive."* AI adoption may be curbing hiring in some sectors, while lower-income groups face dwindling savings buffers.

**Deepening Rifts** Last week’s 6-2 FOMC vote revealed rare dissent—one member pushed for a 50-basis-point cut, another favored no change. Potential 2024 voters like Dallas Fed President Lorie Logan echoed Hammack’s preference for holding rates.

Fed Governor Christopher Waller, a permanent voter and chair contender, countered: *"Our biggest worry is the labor market. Inflation will fall—December cuts are warranted by the data."*

Governor Lael Brainard, another influential voice, reiterated calls for aggressive cuts, citing *"encouraging but modest"* job growth and cooling wage pressures as reasons to lower rates further.

The debate sets the stage for a contentious December meeting, with policymakers torn between data blackouts and competing economic risks.