“Federal Reserve microphone” Nick Timiraos recently wrote that Federal Reserve officials cut interest rates for the third time in a row, but they should be more concerned about inflation or the job market. There are unusual differences within the Federal Reserve, so officials suggest that they are not willing to continue to cut interest rates. Public comments by Federal Reserve officials in recent weeks show that opinions within the committee are so divided that the final decision may depend on how Federal Reserve Chairman Powell wants to proceed. Powell's term expires in May next year, which means he will only chair the next three interest rate setting meetings. Strong price pressure has accompanied the cooling of the labor market, bringing an uncomfortable trade-off for the Federal Reserve. This is a situation it has not faced in decades. During the so-called “stagflation” period in the 1970s, when officials faced similar difficulties, the Federal Reserve's stop-and-go response allowed high inflation to take root. Jonathan Pingle, chief US economist at UBS, said, “As interest rates approach a neutral level, every time you cut interest rates, you lose the support of more participants. You need data to motivate those participants to join the majority to cut interest rates.”

“Federal Reserve microphone” Nick Timiraos recently wrote that Federal Reserve officials cut interest rates for the third time in a row, but they should be more concerned about inflation or the job market. There are unusual differences within the Federal Reserve, so officials suggest that they are not willing to continue to cut interest rates. Public comments by Federal Reserve officials in recent weeks show that opinions within the committee are so divided that the final decision may depend on how Federal Reserve Chairman Powell wants to proceed. Powell's term expires in May next year, which means he will only chair the next three interest rate setting meetings. Strong price pressure has accompanied the cooling of the labor market, bringing an uncomfortable trade-off for the Federal Reserve. This is a situation it has not faced in decades. During the so-called “stagflation” period in the 1970s, when officials faced similar difficulties, the Federal Reserve's stop-and-go response allowed high inflation to take root. Jonathan Pingle, chief US economist at UBS, said, “As interest rates approach a neutral level, every time you cut interest rates, you lose the support of more participants. You need data to motivate those participants to join the majority to cut interest rates.”