FILE PHOTO: San Francisco Federal Reserve Bank President Mary Daly attends the Federal Reserve Bank of Kansas City's 2025 Jackson Hole economic symposium, "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy" in Jackson Hole, Wyoming, U.S., August 21, 2025. REUTERS/Jim Urquhart/File Photo

By Ann Saphir and Howard Schneider

(Reuters) -U.S. central bankers who have supported two interest rate cuts this year signaled on Monday divergent views on the need for more, underscoring the challenge for Federal Reserve Chair Jerome Powell as he helms a divided group of policymakers.

St. Louis Fed President Alberto Musalem was downright skeptical about the prospect of further monetary easing.

"It's very important that we tread with caution here: I think there is limited room to ease policy further without policy becoming overly accommodative," he told Bloomberg Television.

Inflation, he noted, is closer to 3% than the Fed's 2% target. He added that financial conditions including stock valuations and house prices are elevated; monetary policy is nearer to neutral than to modestly restrictive; and the labor market has cooled in an orderly manner.

"I think we need to continue to lean against inflation," said Musalem, who last month voted with the 10-2 majority to reduce the Fed's policy rate by a quarter of a percentage point to the 3.75%-4.00% range.

Signaling a bit more openness to a rate cut was San Francisco Fed President Mary Daly, who said muted wage growth shows demand for labor is cooling, and at the same time tariffs have not lifted inflation in any broad-based or persistent way.

Daly said she is on the alert for the possibility that a rise in productivity from the adoption of artificial intelligence could allow for faster economic growth without pressuring inflation.

"While I'm looking for productivity gains and seeing if they're going to continue, I'm also keeping my eye completely focused on inflation to make sure that it doesn't pick up in a way that would suggest we need to do more or we need to hold longer," Daly told Bloomberg Television.

At the same time, she said, "we don't want to make the mistake of holding on too long for rates, only to find out we injured the economy."

Monthly job growth has fallen from around 150,000 per month in 2024 to around 50,000 in the first half of 2025.

Immigration fell over the same period, reducing the supply of labor. The unemployment rate likely ticked up to 4.4% in October, the Chicago Fed estimates.

"Getting policy right will require an open mind and digging for evidence on both sides of the debate," Daly said.

MIRAN REPEATS CALL FOR BIG RATE CUT IN DECEMBER

Fed Governor Stephen Miran, who dissented in October in favor of a bigger rate cut, feels the evidence is already in, with quickly falling inflation and a softening labor market making further policy easing "imperative." He repeated on Monday his call for a half-percentage-point cut at the policy-setting Federal Open Market Committee's December 9-10 meeting.

"I would think the reasonable thing to be is incrementally more dovish than we were in the September FOMC, which again indicated three cuts," Miran said in an interview with CNBC, referring to the median Fed policymaker view at that time that three quarter-percentage-point rate cuts would be appropriate by the end of 2025. The Fed has delivered two so far.

Financial markets are currently pricing about a 63% chance of a quarter-percentage-point rate cut in December, versus about a 37% probability of a pause in the rate cuts.

(Reporting by Howard Schneider and Ann Saphir; Editing by Paul Simao)