Fed Members Dig In Against Further Rate Cuts as Economic Jitters Mount

Federal Reserve officials push back on market expectations for additional easing.

The Hawkish Stance

Policymakers signal reluctance to reduce rates further amid persistent inflation concerns and global economic headwinds. Their resistance comes despite mounting pressure from Wall Street and political circles.

Market Implications

Traders recalibrate expectations as central bank rhetoric hardens. The dollar strengthens while risk assets face renewed pressure—another reminder that the Fed's dot plots often carry more weight than trader wishful thinking.

Economic Crosscurrents

Conflicting data creates policy paralysis. Strong employment numbers battle softening consumer spending, leaving officials trapped between growth concerns and inflation vigilance. Because nothing says 'stable monetary policy' like watching economic indicators flip-flop faster than a politician's promise.

The Fed's resistance underscores a brutal truth: central bankers would rather be accused of overcautiousness than remembered for fueling another asset bubble. Sometimes the most bullish move is knowing when to hit pause.

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Interest rates were cut by 25 basis points last week, a move that was widely anticipated. Despite initial Optimism among investors, recent statements from Federal Reserve (Fed) members have tempered this sentiment. Many crypto investors had hoped for a 75 basis point reduction by the end of the year, but the majority of Fed officials do not share this expectation. Today, Fed member Austan Goolsbee explained in an interview why a series of rate cuts may not be feasible.

ContentsThe Fed’s Stance on Interest Rate CutsInflation ConcernsFed’s Independence and Monetary Policy

The Fed’s Stance on Interest Rate Cuts

Goolsbee expressed that recent employment data has not raised significant concerns about a recession. Like several of his colleagues, he is not inclined towards additional rate cuts in the near future. Aside from figures like Waller, Bowman, and those aligned with TRUMP within the Fed, there is a general consensus against further reductions.

“I am hesitant to make many rate cuts on the assumption that inflation will be temporary and eventually subside,” Goolsbee stated. He pointed out that while there is a slight cooling in Chicago’s real-time employment figures, there is no significant downturn. “We still have a stable and robust job market for the most part,” he added.

Inflation Concerns

The impact of tariffs on inflation is expected to be a one-time occurrence, a view that has gained traction within the Fed, including with Powell. However, the Fed remains concerned about inflation figures exceeding their 2% target for over four and a half years. Despite employment figures attracting temporary attention, Goolsbee continues to believe that inflation is the primary issue.

The good news is that tariffs have contributed less to inflation than many economists predicted, with new data expected to confirm this trend.

Fed’s Independence and Monetary Policy

Trump has attempted two significant moves: first, using the restoration process as a pretext to dismiss Powell, but he was convinced it WOULD backfire. The second attempt involved firing Lisa Cook, a decision that was overturned in court. His comments about gaining majority control in the Fed were downplayed, even by Bessent.

As debates over the Fed’s independence settle following the court ruling, the market still anticipates two more 25 basis point cuts before the year’s end. Bowman is among those advocating for further reductions, citing concerns about instability in the labor market. While many Fed members believe that the last rate cut might indeed be the last, upcoming inflation and employment figures could change their stance.

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