Fed's Waller calls for rate cut as hawks press for policy pause

A clutch of Federal Reserve bank presidents aired their discomfort with the US central bank's decision to cut interest rates this week, even as influential Fed Governor Christopher Waller made the case for more policy easing to shore up a weakening labour market.

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This yawning divide within the Fed's policymaking ranks poses a challenge for Jerome Powell in forging a consensus in his final six months as the chair.

While it is not unusual for Fed policymakers to differ on policy, particularly when the economic data is mixed, the frank expression of that disagreement and the explicit focus on what the Fed ought to do at its next meeting, on December 9-10, was striking.

"I did not see a need to cut rates this week," Dallas Fed President Lorie Logan told a banking conference. "I'd find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labour market will cool more rapidly."

"Given the move that we just made, I think we're right around my estimate of neutral: I think we're barely restrictive if at all," Cleveland Fed President Beth Hammack said at the same conference. Like Logan, she does not have a vote on policy this year but opposed this week's rate cut; both will have a vote next year.

"I do think we need to maintain some amount of restriction to help bring inflation back down to target," Hammack said.