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

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

On Wednesday, the 14th Eastern Time, Paulson reiterated at an event of the Philadelphia Chamber of Commerce that if inflation cools and the labor market stabilizes, the Fed might further cut interest rates slightly later this year. This was basically consistent with her earlier statement at the beginning of the month. In a media interview, Goolsbee defended the Fed’s independence, saying that “the Fed's independence is crucial for the country's long-term inflation rate.” Kashkari stressed that regardless of who becomes the next Fed chair, Fed policy must be based on data, not political directives, and that the collective decision-making mechanism is the line of defense against interference.

Paulson and Kashkari both hold voting rights in the 2026 Federal Open Market Committee (FOMC) meetings, while Goolsbee holds voting rights for the 2025 meetings. Their comments highlight that, faced with significant rate-cutting pressures from the Trump administration, Fed officials insist on basing rate policy decisions on economic data rather than political preferences. Currently, the market generally expects that the Fed’s FOMC meeting on January 27-28 will decide to hold steady and pause rate cuts.

Paulson Reiterates Moderate Rate Cut Stance

In her prepared remarks on Wednesday, Paulson said she is “cautiously optimistic” about inflation, and believes that “at the current pace, inflation could 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 these happen, it may be appropriate to make some further moderate adjustments to the federal funds rate later this year.”

Paulson said that the current monetary policy stance is “slightly restrictive,” and this degree of tightening will help inflation “fully” return to the Fed’s target of 2%. She noted that the labor market is “clearly bending, but not breaking,” and that labor market risks “have increased, which is an important reason why I supported the FOMC’s 75-basis-point rate cut last year.”

Paulson also mentioned that many companies have raised prices due to tariffs, and that price pressure will mainly be concentrated in the goods sector. She believes that the easing of inflation in the service sector is “encouraging,” and housing inflation data is “undeniably good.” She also pointed out that employment data better reflect economic momentum than growth data.

This continues Paulson’s detailed policy positions as this year’s FOMC voting member. At the beginning of January, she stated that at the 3.5%-3.75% level, the Fed’s rate target remains “slightly restrictive,” which means rates are high enough to curb high inflation, and may ultimately allow the Fed to further cut rates.

Goolsbee Defends Fed Independence

In Wednesday’s interview, Goolsbee stressed the necessity of Fed independence for achieving low inflation and stable prices. He stated:

“Anywhere without central bank independence, inflation will come back. We’ve spent the past five years working to reduce the inflation rate, and it’s not easy. If you attack the Fed’s independence, it will make things worse.”

Goolsbee expressed appreciation for Fed Chair Powell, adding, “If we find ourselves in a situation where Fed independence or even Chair Powell’s integrity is questioned, we are disadvantaged.”

Goolsbee’s remarks come as the Department of Justice last week subpoenaed the Fed, investigating statements Powell made in congressional testimony last year. Powell issued a statement last Sunday, saying the action relates to the Fed’s rate setting based on economic conditions, rather than Trump’s preference for sharp rate cuts.

Goolsbee also said on Wednesday that December’s CPI growth was below expectations, which was good. He said: “One of the things I’m watching is whether consumers continue to be the driving force for growth. Regarding inflation, is there evidence that we’re leaving price surges behind us?”

Kashkari Advocates Holding Rates Steady in January

Interviews published by the media this Wednesday show Kashkari saying that the pressure from Trump on the Fed over the past year has been driven by interest rates, and that mentions of pressure escalation over the past year are actually related to monetary policy. He considers Powell’s characterization of the criminal investigation as accurate, namely that the Trump administration is using administrative means as leverage to force the Fed to cut rates.

Kashkari warned that if the US Supreme Court makes a ruling favorable to Trump, enabling the president to arbitrarily remove officials, it would undermine the basic elements of Fed independence. He also noted that Supreme Court statements over the past year seem to show a tendency to treat the Fed differently from other independent agencies.

Kashkari also stated that the Fed should keep rates unchanged 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 remaining elevated as reasons not to cut rates further now. He worries that inflation may remain above the Fed’s 2% target for the next two to three years.

Fed officials cut rates by 25 basis points at each of the last three meetings from September to December 2025, but as the end of the year approaches, differences over whether to continue cutting rates have increased. Most market participants now expect the next Fed rate cut will not happen until June. According to Fed projections released last month, most policymakers expect only one 25-basis-point rate cut this year.

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