Federal Reserve officials are increasingly divided over whether stubborn inflation or a weakening job market poses the bigger risk, clouding the outlook for interest rate cuts, The Wall Street Journal writes.
The disagreement—one of the deepest during Jerome Powell’s tenure—has intensified after the government shutdown halted key economic data.
While investors still expect a possible December cut, hawkish policymakers are pushing to pause cuts after two recent rate reductions, warning that tariffs and consumer spending could keep prices high. Doves counter that slowing payroll growth signals a fragile labor market.
The debate reflects the economy’s rare mix of rising inflation and stagnant job creation—hallmarks of stagflation—partly tied to trade and immigration shifts under the Trump administration. New data due before the Fed’s Dec. 9–10 meeting could determine whether Powell’s committee resumes cutting rates or delays until January, underscoring the fine line between caution and overcorrection.
