Federal Reserve Divided on “Rate Cut This Year”! Some Officials Call for “Conditional Rate Hike” to Curb Inflation

Fed officials have recently expressed different attitudes towards whether to cut interest rates this year. Officials such as Michelle Bowman, a board member, and Lorie Logan, president of the Dallas Fed, believe that it is not appropriate to lower interest rates this year, citing sustained inflation in the first few months. However, Raphael Bostic, president of the Atlanta Fed, indicated that the Fed may still cut rates this year, even if the pace of inflation decline is slow. He explained that most employers expect wage growth to return to pre-pandemic levels, which could slow down wage and job growth and help cool inflation. Bostic emphasized that it may still take some time to see if job growth will actually slow down. Additionally, Austan Goolsbee, president of the Chicago Fed, stated that he has not seen much evidence to suggest that inflation remains above the Fed’s target, potentially indicating a tendency to support rate cuts. However, he did not specify when it would be appropriate to cut rates. It has been reported that there are two factions within the Fed, with one concerned about maintaining rates at a high level for too long in the face of slowing inflation and wage growth, and the other believing that there is little need for rate cuts this year due to strong economic performance.