She said she believes robust growth, a healthy labor market and still-high inflation make it necessary to “maintain moderately restrictive monetary policy for some time” to bring inflation back down to the Fed’s 2 percent target .

“Given the possibility that policy may not be far from neutral, I believe we are at or near the point where it makes sense to slow the pace of rate cuts,” she said.

This will require a slower pace of rate cuts compared to its September forecast, it added.

Other Fed officials are also urging caution. Fed Governor Michelle Bowman, who opposed the Fed’s first interest rate cut in September, said in an appearance in Missouri on Friday that she still had concerns about inflation.

Progress on this front “appears to have stalled” and cutting interest rates too quickly could “reignite inflationary pressures.”

Therefore, “I would prefer that we take a cautious and gradual approach to cutting the key interest rate,” without saying what she expects from the Fed at its December meeting.

However, Fed Governor Chris Waller made it clear in his comments this week that he is leaning toward another rate cut in December, noting that the labor market finally appears to be in balance and the Fed should “aim to keep it that way.” .

But he said if the next inflation data continued to show a moderate slowdown, he might lean toward keeping rates stable.

Chicago Fed President Austan Goolsbee, speaking Friday, declined to predict what the Fed would do at its policy meeting later this month, saying that “everything is always on the table.”

However, he noted that the Fed is in a “moment of transition” and “we will have a series of meetings that will focus on a narrow decision between cutting rates or not cutting them.”

However, Goolsbee reiterated an earlier forecast: “If conditions develop next year as they have and as I expect, interest rates will be quite a bit lower than they are today.”

The next important data point is the consumer price index, which will be released next Wednesday, followed by producer prices on Thursday. Both will be crucial to the Fed’s decision.

Economists expect the “core” CPI, which excludes volatile food and energy prices that the Fed cannot control, to remain steady at 3.3% in November versus October.

The data from these reports can also be used to make some estimates about the Fed’s preferred measure of inflation – the “core” personal consumption expenditures (PCE) index – to see whether a current trend of stickiness will continue if the PCE will be officially released December 20th.

This key PCE measure, which excludes food and energy prices, rose 2.8% in October, up from 2.7% in September. The three-month annual rate also jumped to 2.8%.

Minutes from the Fed’s November policy meeting suggested that some officials may favor a pause if inflation remains high.

Interactive Brokers’ Sosnick noted that Friday’s jobs report showed wage growth, a key measure of inflation pressures, rose 0.4% in November.

That matched October’s increase and was above the 0.3% increase economists had expected.

“If wages rise faster than the Fed’s target, that doesn’t help them meet their price stability mandate,” he said.

RSM chief economist Joe Brusuelas said: “While today’s (Labor) report supports a 25 basis point cut at the December 18 meeting, I don’t think we will see further action until March next year at the earliest.”

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