The Federal Reserve's 2026 voting members maintain a cautious stance, while the 2025 voting members emphasize that independence is crucial in combating inflation

Several regional Federal Reserve presidents have recently reiterated the possibility of a moderate interest rate cut later this year, while emphasizing that the independence of the central bank is essential for maintaining price stability. Philadelphia Fed President Anna Paulson and Chicago Fed President Austan Goolsbee expressed their views on the economic outlook and monetary policy, while Minneapolis Fed President Neel Kashkari explicitly advocated for keeping interest rates unchanged at the monetary policy meeting at the end of this month.

On Wednesday, the 14th, Eastern Time, Paulson reiterated at a Philadelphia Chamber of Commerce event that if inflation cools and the labor market stabilizes, the Federal Reserve may further implement a slight interest rate cut later this year. This is consistent with her statements earlier this month. Goolsbee defended the independence of the Federal Reserve in a media interview, stating that "the independence of the Federal Reserve is crucial for the long-term inflation rate of this country." Kashkari emphasized that regardless of who the next Federal Reserve chair is, the Fed's policies must be based on data rather than political directives, and the collective decision-making mechanism is a defense against interference.

Both Paulson and Kashkari have voting rights for the Federal Open Market Committee (FOMC) meetings in 2026, while Goolsbee has voting rights for the 2025 meetings. Their statements highlight that, despite significant pressure for interest rate cuts from the Trump administration, Federal Reserve officials remain committed to formulating interest rate policies based on economic data rather than political preferences. Currently, the market widely expects that the FOMC meeting on January 27-28 will decide to hold rates steady and pause any rate cuts.

Paulson Reiterates Moderate Rate Cut Stance

In a prepared speech on Wednesday, Paulson expressed a "cautiously optimistic" view on inflation, believing that "at the current pace, it is very likely that the inflation rate will be close to 2% by the end of the year." She expects inflation to slow, the labor market to stabilize, and economic growth to reach about 2%. She stated:

"If all of this comes to fruition, it may be appropriate to make some moderate further adjustments to the federal funds rate later this year."

Paulson noted that the current monetary policy stance is "slightly restrictive," and this level of tightening will help inflation "fully" return to the Fed's target of 2%. She pointed out that the labor market is "clearly bending but not breaking," and the risks in the labor market "have increased, which was an important factor in my support for the FOMC's 75 basis point rate cut last year."

Paulson also mentioned that many businesses have already raised prices due to tariffs, and price pressures will mainly focus on the goods sector. She believes that the easing of inflation in the service sector is "encouraging," and the housing inflation data is "undoubtedly good." She also noted that employment data reflects economic momentum better than growth data.

This marks the continuation of Paulson's detailed policy statements as a voting member of the FOMC this year. She stated earlier in January that at the level of 3.5% to 3.75%, the Fed's interest rate target remains "slightly restrictive," which means that rates are high enough to curb high inflation and may ultimately allow the Fed to cut rates further.

Goolsbee Defends Fed Independence

In an interview on Wednesday, Goolsbee emphasized the necessity of the Fed's independence for achieving low inflation and stable prices. He stated:

"In any place where there is no independence of the central bank, inflation will come back. We have been working hard to reduce the inflation rate over the past five years, which is not easy. If you attack the independence of the Federal Reserve, it will make the problem worse."

Goolsbee expressed appreciation for Federal Reserve Chairman Powell and added, "If we find ourselves in a situation where the independence of the Federal Reserve or even the integrity of Chairman Powell is questioned, we are in a disadvantaged position."

Goolsbee's remarks come as the Justice Department issued a subpoena to the Federal Reserve last week, investigating Powell's statements during last year's congressional testimony. Powell stated last Sunday that this action is related to the Federal Reserve setting interest rates based on economic conditions, rather than Trump's preference for significant rate cuts.

On Wednesday, Goolsbee also mentioned that the lower-than-expected CPI increase in December is a good thing. He said, "One thing I am concerned about is whether consumers will continue to be the driving force for growth. In terms of inflation, is there evidence that we are leaving the price surge behind?"

Kashkari Advocates for No Action in January

In an interview released by the media on Wednesday, Kashkari stated that the pressure from Trump on the Federal Reserve over the past year has been driven by interest rates, and the escalation of pressure over the past year is actually related to monetary policy. He believes that Powell's characterization of the nature of this criminal investigation is accurate, namely that the Trump administration is using executive means as leverage to force the Federal Reserve to cut rates.

Kashkari warned that if the U.S. Supreme Court makes a ruling favorable to Trump, allowing the president to arbitrarily replace officials, it would undermine the fundamental elements of the Federal Reserve's independence. He also noted that the Supreme Court's statements over the past year seem to indicate a tendency to treat the Federal Reserve differently from other independent agencies.

Kashkari also stated that the Federal Reserve should maintain interest rates at the upcoming FOMC meeting at the end of this month, although policymakers may cut rates again later this year. He cited economic resilience and concerns about inflation still being high as reasons for not further cutting rates at this time. He is worried that inflation may remain above the Federal Reserve's 2% target for the next two to three years.

Federal Reserve officials have cut rates by 25 basis points in the last three meetings from September to December 2025, but as the end of the year approaches, the divergence on whether to continue cutting rates has increased. Currently, most market participants expect the next rate cut by the Fed to occur in June. According to the forecasts released by the Federal Reserve last month, most decision-makers expect only one 25 basis point rate cut this year