"The Fed's mouthpiece": Three rate cuts have failed to quell internal disputes; the risk of stagflation needs to be guarded against.

According to a recent article by Nick Timiraos, a well-known figure in the Federal Reserve's internal communications, the Fed has cut interest rates for the third consecutive meeting. However, unusual divisions exist within the Fed regarding whether inflation or the job market should be a greater concern, leading officials to suggest a low willingness to continue cutting rates. Recent public comments from Fed officials indicate a deep division within the committee, to the point that the final decision may depend on how Fed Chairman Jerome Powell wants to proceed. Powell's term expires next May, meaning he will only chair the next three interest rate-setting meetings. Strong price pressures coupled with a cooling labor market present the Fed with an unpleasant trade-off, a situation unseen for decades. During the so-called "stagflation" of the 1970s, when officials faced a similar dilemma, the Fed's stop-and-go approach allowed high inflation to take hold. Jonathan Pingle, chief UBS US economist, stated, "As interest rates approach neutral, with each rate cut you lose more support from participants, and you need data to incentivize those participants to join the majority in implementing rate cuts." (Jinshi)