Federal Reserve Governor Michael Barr said the US central bank needs to proceed with caution in considering additional interest-rate cuts with inflation still running a full percentage point above its target.

“Lowering interest rates to support the labor market risks prolonging this period of elevated inflation, and it could also encourage risk-taking in financial markets.,” Hammack said Thursday. “This means that whenever the next downturn comes, it could be larger than it otherwise would have been, with a larger impact on the economy.”

Regarding other economic sectors, Hammack pointed out that housing input costs are "a real issue" and expressed interest in seeing more use of the Fed’s standing repo facility. She also noted she is closely monitoring private credit markets, saying she "generally feels good" about them but believes they "merit watching."

Several Federal Reserve district bank presidents have voiced concern this month about persistent inflation and cautioned against more reductions in borrowing costs.

The Federal Reserve is contending with two main obstacles — a dual mandate of keeping prices in check and sustaining job growth and a lack of economic data caused by the government shutdown. Those

The recent focus on the Federal Reserve has brought renewed public scrutiny of an institution that hasn’t been able to catch a break.

Federal Reserve Bank of St. Louis President Alberto Musalem said officials should move cautiously with further interest rate reductions with inflation running above the central bank’s 2% target.

"Instead, tariff shocks appear to act as aggregate demand shocks—moving inflation and unemployment in the same directions."

The release had widely been expected to be hawkish on balance, but the new information casts further doubt on the likelihood that the Fed will opt for a third consecutive cut in December, as rate-setters were said to have “strongly differing views” about the merits of such a move.