Fed Faces Internal Debate Amid Calls for Rate Cuts

According to PANews, a recent report by China International Capital Corporation (CICC) highlights a significant increase in market expectations for interest rate cuts by the Federal Reserve. The report notes growing internal disagreements within the Fed, with some members advocating for rate cuts while others suggest a more cautious approach. U.S. President Donald Trump and Treasury Secretary Besant are among those pressuring the Fed to implement substantial rate reductions. However, the report argues that current conditions do not support significant rate cuts, as the United States faces the risk of 'stagflation-like' conditions. It suggests that monetary policy should focus on stabilizing inflation expectations rather than pursuing short-term growth or yielding to political pressure. Consequently, the report predicts that the Fed will adopt a cautious stance on rate cuts and avoid aggressive easing measures. The coexistence of slowing employment and persistent inflation adds complexity to the monetary policy path, increasing the uncertainty of future decisions.