'Fed Whisperer': Three Rate Cuts Fail to Resolve Internal Disputes, Beware of 'Stagflation Risk'

BlockBeats News, December 11, the latest article by 'Fed Whisperer' Nick Timiraos states that Federal Reserve officials have cut rates for the third consecutive meeting, but there is unusual disagreement within the Fed over whether inflation or the job market should be the greater concern. As a result, officials have indicated a low willingness to continue cutting rates. Recent public comments by Fed officials suggest that the committee is deeply divided, to the extent that the final decision may depend on how Fed Chair Powell wishes to proceed. Powell's term is set to expire next May, meaning he will only preside over the next three rate-setting meetings. Persistent price pressures accompanied by a cooling labor market present the Fed with an unpleasant trade-off, a situation it has not faced in decades. During the so-called 'stagflation' period of the 1970s, when officials faced a similar dilemma, the Fed's stop-and-go approach allowed high inflation to become entrenched. Jonathan Pingle, Chief U.S. Economist at UBS, stated: 'As rates approach neutral levels, with each rate cut, you lose more participants' support. You need data to motivate those participants to join the majority in favor of rate cuts.' (Jin10)