"Federal Reserve Messenger": Three interest rate cuts are difficult to settle internal disputes, and "stagflation risk" needs to be vigilant

"Fed mouthpiece" Nick Timiraos wrote in the latest article that Federal Reserve officials cut interest rates for the third time in a row, but there are unusual differences within the Federal Reserve over whether inflation or the labor market should be a bigger concern, so officials are not very willing to continue to cut interest rates. Public comments from Fed officials in recent weeks have shown that opinions within the committee are so divided that the final decision may depend on how Federal Reserve Chairperson Powell wants to proceed. Powell's term expires in May next year, which means he will only chair the next three rate-setting meetings. Firming price pressures have accompanied a cooling labor market, presenting the Fed with an unpleasant trade-off that has not been faced in decades. When officials faced similar dilemmas during the so-called "stagflation" of the 1970s, the Fed's stop-and-go approach entrenched high inflation. "With interest rates near neutral, every time you cut rates you lose support from more participants, and you need data to incentivize those participants to join the majority to get them down," says Jonathan Pingle, chief US economist at UBS.