Fed's unofficial spokesman: Internal divisions persist despite 3 rate cuts

Internal divisions at the Federal Reserve remain unresolved despite three consecutive interest rate cuts, according to Nick Timiraos, a Wall Street Journal reporter often described as the central bank's unofficial spokesperson. Timiraos stated that there is an unusual level of disagreement within the Fed over whether to prioritize inflation or the labor market. He added that Fed officials have signaled a reduced appetite for further rate cuts, with the final decision likely resting on the future actions of Chair Jerome Powell. Powell's term ends next May, leaving him to preside over only three more FOMC meetings. The Fed is currently in a difficult position not seen in decades, simultaneously grappling with high inflationary pressures and a slowing labor market. Timiraos explained that when faced with a similar dilemma during the 1970s stagflation, the Fed's cycle of cutting and then raising rates ultimately led to entrenched high inflation.