Several senior officials of the Federal Reserve said they are not worried about the September CPI, but some voting members are wavering and do not oppose pausing rate cuts in November

The data released on Thursday showed that the inflation rate in the United States in September exceeded expectations, indicating that the recent decline in inflation has been hindered. Analysts believe that higher-than-expected inflation data, coupled with the strong performance of the US non-farm payrolls report last week, may intensify the discussion on whether the Federal Reserve will choose to make a slight rate cut next month or pause the rate cuts after a significant cut in September.

On Thursday, several senior officials of the Federal Reserve spoke out. Most of them believe that although US inflation has not yet reached 2%, they are confident that inflation is moving in the right direction and are not too concerned about the higher-than-expected CPI inflation report in September. However, Atlanta Fed President Bostic, who is not considered hawkish, said that based on the recent mixed data, he maintains an absolutely open attitude towards pausing rate cuts in November.

According to the latest dot plot released by the Federal Reserve in September, Fed officials plan to cut rates by another half percentage point before the end of the year, with many saying they are monitoring developments in the labor market.

Although US inflation exceeded expectations across the board in September, the initial jobless claims data released on that day soared to a one-year high. Investors are paying more attention to the impact of the slowdown in the labor market, with traders betting that the probability of a 25 basis point rate cut in November has risen to over 80%.

Federal Reserve's Third-in-Command: Downward Inflation Trend Remains Quite Stable

William Williams, the third-in-command at the Federal Reserve and President of the New York Fed, stated that the inflation rate has not yet reached the 2% target, but he is confident that inflation is moving in the right direction. Despite some minor setbacks, the overall trend of downward inflation in the United States remains quite stable. Various indicators of the labor market suggest that labor is unlikely to be a source of price pressure.

Williams believes that the risks of achieving inflation and employment goals have been better balanced, and the data paints a picture of a balanced US economy. Over time, shifting monetary policy towards neutrality is appropriate. Transitioning to a more neutral monetary policy stance as progress is made towards price stability will help maintain a strong economy and labor market. The Federal Reserve will continue to make policy decisions based on economic data.

Williams praised the US labor market for remaining robust despite cooling over the past year. He pointed out that this should provide the Federal Reserve with room to adjust interest rates to a level that neither hinders nor stimulates the economy.

Chicago Fed President: Not Too Concerned About September CPI Exceeding Expectations

Chicago Fed President Goolsbee stated that the latest US inflation data largely met expectations. The overall trend shows that the inflation level has significantly decreased. He is not too concerned about the September CPI inflation report exceeding expectations.

Goolsbee stated that he fully agrees with Chairman Powell's previous views on the dual mandate of the Federal Reserve. He insists that the Federal Reserve is no longer just focused on price pressures. "The overall trend over the past 12 to 18 months is clearly - inflation has dropped significantly, the labor market has cooled, and the labor market has reached what we consider to be full employment."

Goolsbee said that the Federal Reserve must take a longer-term view and closely monitor current economic data. He mentioned the need to focus on data such as job vacancies, quit rates, and hiring rates Goolsbee is considered more willing to support rate cuts than many of his Federal Reserve colleagues. He said that in recent months, the Federal Reserve's FOMC has experienced a series of meetings where there was a deadlock on rate cuts, and he expects that there may be more similar deadlocked meetings within the Federal Reserve in future FOMC meetings.

Richmond Fed President: Growing Confidence in Controlling Inflation

Richmond Fed President Barkin stated that the inflation rate is changing in the right direction. The inflation level has significantly decreased, but it is not yet time to declare victory over inflation. There is increasing confidence in controlling inflation.

Barkin mentioned that the Federal Reserve should have started raising rates from 2021. If the Federal Reserve had started raising rates earlier, there would be no need for a rapid and substantial rate hike. The Federal Reserve is trying to balance the risks faced by the labor market and inflation.

Barkin expects that lowering interest rates may bring risks of heating up the real estate market. The pace of growth in U.S. housing demand may exceed the supply level.

Barkin also noted that the increase in U.S. debt could bring risks of rising borrowing costs.

Atlanta Fed President: Open to Pausing Rate Cuts in November

This year's voting member and Atlanta Fed President Bostic supported the significant 50 basis point rate cut last month and expected a further quarter-point cut later this year. Bostic now says that he fully supports the decision to lower rates by half a percentage point last month because the Federal Reserve has kept rates at a 20-year high for quite some time.

Bostic stated on Thursday that based on the economic outlook, he believes it is reasonable to cut rates at both of the remaining meetings this year or at one of them, but recent mixed data suggests, "perhaps we should pause in November. I am absolutely open to this. If the data unfolds as I expect, I am willing to take no action at one of the last two meetings."

Bostic said, "I think we have the ability to be patient and let things evolve for a while. I think some of the content in today's CPI report confirms this view."

Bostic also said that he had long expected monthly fluctuations in economic data, which could make identifying underlying trends complex. However, the latest data has not changed his expectation for a series of rate cuts by the Federal Reserve next year:

I have been saying that we should expect data to fluctuate—I have always used the word "volatile." We may occasionally receive volatile reports. But the question is, do they signal a new trend?

Bostic estimates that the so-called neutral rate, which neither stimulates nor slows economic growth, is between 3% and 3.5%, and he expects rates to fall close to this level next year. "This is a journey towards neutrality, where the subtle differences are moving 25 basis points here, 50 basis points there, I don't think these are very important."