Divided Fed policymakers stake out positions ahead of December meeting

US Federal Reserve officials on Monday continued pressing competing views of where the economy stands and the risks facing it, a debate set to intensify ahead of the US central bank’s next policy meeting and in the absence of data suspended due to the federal government shutdown.

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In her first public remarks since President Donald J. Trump launched a so-far unsuccessful attempt to remove her from her position, Fed Governor Lisa Cook portrayed a tug-of-war view of the policy debate, saying elevated risks to both the central bank’s employment and inflation mandates leave the Dec. 9-10 meeting “live” for a possible rate cut, but not a lock.

“Keeping rates too high increases the likelihood that the labor market will deteriorate sharply,” though for now the labor market is “still solid,” she said during an event at the Brookings Institution.

On the other hand, Ms. Cook said, “lowering rates too much would increase the likelihood that inflation expectations will become unanchored,” though at this juncture “it is encouraging that most long-run inflation expectations... are low and stable.”

“The dual mandate is in tension... so I’m attentive to both sets of risks,” said Ms. Cook, who is embroiled in a legal battle with Mr. Trump over his effort to remove her as a Fed governor. The US Supreme Court is due to hear arguments in the case early next year.

SHARP SPLIT, DOVISH ANXIETY

Speaking earlier in the day San Francisco Fed chief Mary Daly offered a similarly evenhanded perspective, saying she viewed last week’s cut as further “insurance” against labor market weakening and has an “open mind” about the need for a similar move in December.