Shaken! Federal Reserve Voting Committee: Open to not cutting interest rates in November

On Thursday, three Federal Reserve policymakers expressed no concern about the higher-than-expected September inflation report, indicating that the Fed may continue to cut interest rates, but one official hinted that he may lean towards pausing the rate cuts at the next meeting.

New York Fed President Williams said at an event at Binghamton University, "Every month's data has fluctuations, but we have seen this fairly stable downward process of inflation. I expect this situation to continue."

Williams added that he believes "over time, continuing to move the monetary policy stance towards a more neutral setting" would be appropriate.

Chicago Fed President Evans told CNBC that the overall trend of inflation over the past 12-18 months has been clearly declining. Richmond Fed President Barkin stated that inflation is "definitely moving in the right direction".

The exception on Thursday was Atlanta Fed President Bostic, who expressed openness to not cutting rates in November. In an interview with The Wall Street Journal, he revealed that in the forecasts released in September, he called for only a 25 basis point rate cut for the rest of the year. The Fed has two more meetings in 2024. He said, "If the data shows it's appropriate, I fully support skipping a rate cut." These comments were made after the U.S. Bureau of Labor Statistics reported a higher-than-expected potential inflation increase in September.

Core CPI rose for the second consecutive month by 0.3%, breaking the trend of consecutive declines. According to Bloomberg calculations, the 3-month annualized inflation rate rose by 3.1%, the highest level since May. The new inflation report, along with a strong September jobs report, may support calls for the Fed to take a more gradual approach in the coming months. The Fed released a series of more positive inflation reports before the rate cut in September, while there were signs of weakness in the labor market.

Stephanie Roth, Chief Economist at Wolfe Research, said, this may lead some Fed officials to consider pausing rate cuts, depending on subsequent data. Roth said, "I don't think today's data will change much. We expect them to cut rates at every meeting, but if the labor market and inflation data continue to trend as they are now, they are likely to switch to cutting rates every other meeting."

While only Bostic showed signs of considering pausing rate cuts, Williams and Barkin also cautiously stated that the battle against inflation is not completely over.

Williams said, "There is still a way to go to reach the 2% inflation target, but we are definitely moving in the right direction. The data paints a picture of an economy that has rebalanced." Barkin said he is not ready to "declare victory" yet. Meanwhile, Evans acknowledged that the Fed's next steps will be fiercely debated at the next meeting in Washington on November 6-7 Former US President Trump's response to the latest CPI data was to criticize the Federal Reserve's decision to cut interest rates by 50 basis points last month. Speaking at the Detroit Economic Club, he said, "The fact is, the Federal Reserve is cutting rates a little too fast. The rate cut is too big, everyone knows that this is a political strategy they are trying to adopt before the election, but they are wrong."