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Fed Mouthpiece: Core of Fed's Divide Lies in Inflation Outlook, Not Policy Direction

1 hours ago

Wall Street Journal reporter Nick Timiraos said the Federal Reserve’s June meeting minutes reveal that disagreements among officials stem mainly from differing assessments of future economic trends, rather than fundamental conflicts over interest rate hike or cut strategies. Two potential scenarios have taken shape within the Fed: If inflation stays persistently high, nearly all officials believe higher interest rates will need to be maintained, or even further policy tightening; if inflation quickly falls back to the 2% target, nearly all officials also agree that current rates can be held steady, or even future rate cuts are possible. He noted that the phrase “quickly falls back to 2%” is key, as it preserves policy adjustment room for the Fed. Currently, officials’ core concern is whether inflation will rebound continuously or resume its downward trajectory. Timiraos concluded that the Fed’s next move will still hinge on economic data, especially inflation performance. Markets had previously priced in rate cuts, but the latest minutes show significant uncertainty remains over the policy outlook.

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