The Federal Reserve’s December policy meeting delivered a third consecutive quarter-point rate cut, bringing the federal funds rate down to a 3.5%–3.75% range. But the decision was far from unanimous. In fact, the meeting produced the highest number of dissents in more than six years, with Chicago Fed President Austan Goolsbee, Kansas City Fed President Jeff Schmid, and Fed Governor Stephen Miran all breaking from the majority. Their reasons shed light on why the central bank remains cautious—and why some policymakers believe the Fed should have waited before easing further.
At the core of the dissent is a simple theme: uncertainty. Goolsbee and Schmid both argued that the Fed lacks enough recent data to justify another cut. With government reporting disrupted and key inflation releases delayed, the policymakers said they were uncomfortable lowering rates again without a clearer picture of how prices and demand are evolving. Goolsbee stressed that waiting until early 2026 for updated data would not have introduced meaningful economic risk, but it would have allowed the Fed to make a more informed call. In his view, patience was the more prudent option.
Both Goolsbee and Schmid pointed to inflation as the most compelling reason to pause. After moving sharply lower in 2023, progress on inflation has stalled for several months. Businesses across multiple sectors continue to cite rising input costs, and consumer surveys show persistent unease about prices. Schmid went further, warning that inflation is still “too hot” and that the economy’s ongoing momentum suggests current policy may not be restrictive enough. He raised the concern that households and firms could begin incorporating inflation into their everyday decision-making—a trend that historically makes inflation harder to bring down.
Goolsbee acknowledged that some price pressures appear tied to tariffs and may prove temporary, but he also highlighted risks that inflation in services could remain sticky. With the labor market cooling gradually rather than sharply, he argued there is no urgent economic threat that requires cutting rates before more evidence arrives. Hiring and firing activity has slowed into what he described as a “low hiring/low firing” environment—typical of businesses navigating uncertainty rather than signaling any dramatic downturn.
Fed Governor Stephen Miran dissented for a different reason, preferring a larger 0.50% cut. His stance reflects the broader tension within the central bank: some officials fear easing too slowly risks stalling momentum, while others worry easing too quickly risks reigniting inflation. The result is a policy landscape where the Fed is attempting to balance growth risks against inflation risks in real time, with incomplete information.
Still, the majority of the committee moved forward with the cut, signaling confidence that inflation will eventually resume its downward trend. But the dissents highlight that key voices inside the central bank are urging caution. For investors, the takeaway is straightforward: the Fed is not unanimously convinced that the inflation battle is over, and future rate moves may be more contested than markets expect.
