「Fed Whisperer」: Three Rate Cuts Amid Internal Discord Difficult to Resolve, Caution Needed Against 'Stagflation Risk'
BlockBeats News, December 11th, in his latest article, the "Fed Whisperer" Nick Timiraos stated that Fed officials cut interest rates for the third consecutive meeting, but they are more concerned about inflation or the job market. There is an unusually high degree of internal division within the Fed, so officials have hinted at a reluctance to continue cutting interest rates. In recent weeks, public comments from Fed officials have shown a significant split within the committee, to the extent that the final decision may depend on Fed Chair Powell's preferred path.
Powell's term will expire next May, meaning he will only preside over the next three rate-setting meetings. Persistent price pressures alongside a cooling labor market have presented the Fed with an unpleasant trade-off, a situation not faced in decades. During the so-called "stagflation" period of the 1970s, when officials faced a similar dilemma, the Fed's start-and-stop approach allowed high inflation to take root.
Jonathan Pingle, Chief U.S. Economist at UBS, said: "As rates approach the neutral level, with each rate cut, you lose more support from participants, and you need data to motivate those participants to join the majority to achieve a rate cut." (FXStreet)
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