Federal Reserve Governor Cook leaves room for December rate cut

Federal Reserve governor Tim Cook said on Monday that she saw a potential rate cut at the Fed's December meeting but that the decision would be based on information from a wide range of sources between now and then, especially as the shutdown delays the release of official data. "Risks on both sides of the dual mandate are rising right now," Cook said. "Keeping rates too high increases the likelihood of a sharp deterioration in the labour market and cutting rates too far could unanchor inflation expectations." "It's challenging to deliver an economic outlook speech at a time like this," she said, noting that the latest official data on employment, inflation and growth had been missing since the government shutdown on October 1. But she stressed: "We are not acting blindly." Policymakers and staff are actively combing through the various administrative and private sector data available, as well as the results of the Federal Reserve's various surveys of businesses and households. The data have so far confirmed her judgment that inflation will remain slightly above target and subject to upside risks, while the labour market as a whole remains solid but is cooling and may decline faster than expected.