Divergences Come to the Fore: Same Data, Different Conclusions
In the latest public statements, several Federal Reserve policymakers have emphasized different aspects of the future policy path: Some officials believe that although inflation remains above the 2% target, it is on a downward trajectory, suggesting it is appropriate to “ease slightly further.” Conversely, others emphasize that price trends remain unsatisfactory and that prematurely cutting interest rates could result in policy “jumping the gun.” The same macroeconomic picture, different weighting frameworks, reflecting the committee's ongoing rebalancing of growth, employment, and price relationships.
Contrasting Voices: Openness, Caution, and Compromise
San Francisco Fed President Daly explicitly supports last week's 25 basis point rate cut, stating that under the backdrop of weakening yet not "plummeting" employment, a "modestly lower" policy rate is a discussable option—keeping the December meeting "open." In contrast, Chicago Fed President Goolsbee has raised his threshold for rate cuts, citing persistent inflation above target and unconvincing trends, advocating that “rates should come down in tandem with inflation rather than anticipating it.” Between these views, Fed Governor Cook stresses the coexistence of bidirectional risks: if rates are too high, the labor market may weaken faster; if cut too much, expectations might lose anchor. Therefore, she defines the December meeting as a “potential” point for rate cuts while supporting evidence-based decision-making.
Alternative Information Amid Data Gaps: Policy is Not "Flying Blind"
The government shutdown has caused delays in official statistics, creating discontinuities in the traditional monthly data chain. Several officials have proposed using business surveys, high-frequency employment and price tracking, and financial condition indicators as supplementary frameworks: capturing marginal changes in wages, rents, and core service inflation; assessing the real constraints on business and residential lending environments and costs. The shift in information sources has heightened policy uncertainty, forcing the market to reinterpret “data dependency” from a release-day context to one of “evidence accumulation.”
Market Pricing Reshuffle: Fifty-Fifty Chances, but Logic Changed
In trading, investors are maintaining the subjective probability of a December rate cut at about 50%, but the structure of drivers has changed: the previous “linear easing” expectations benefited rate-sensitive assets. Now “conditional easing” requires consistent signals from inflation, employment, and financial stability. For the bond market, the long end of the curve is more sensitive to inflation's stickiness; for forex, if the Fed's tone turns hawkish, the relative advantages of US Treasury yields and the dollar bolster, pressuring non-USD currencies; for stocks, earnings and cash flow quality matter more than “valuation elasticity” itself, leading to increased differentiation.
Three Risk Coordinates: Inflation Slope, Employment Resilience, Credit Tension
First, look at the inflation slope—whether the decline in core services, rents, and wages forms a clearer chain, determining the "sustainability" of rate cuts. Second, observe employment resilience—whether the slowdown in hiring and a decline in quit rates indicate marginal cooling in demand rather than a cyclic downturn. Third, consider credit tension—whether financing spreads, defaults, and refinancing difficulties are increasingly exposed at the high rate tail; if credit cracks widen, calls for rate cuts will strengthen. If the three clues coalesce, the likelihood of a "reduction one more time" in December will rise; if they offset each other, policy is more likely to remain unchanged with expectation management through communication.
Policy Implications and Outlook: From "Rhythm Disputes" to "Boundary Debates"
The current focus is not on "whether to cut rates," but on "when, by how much, and for how long." The open camp hopes to lower policy restrictiveness at a faster pace to prevent lagging damage to credit and employment; the cautious camp emphasizes the unwavering credibility of the inflation target, preferring to be late rather than early. It is foreseeable that the committee will continue to seek dynamic balance amid dilemmas: replacing singular data with denser evidence, and substituting one-time commitments with more meticulous communication. For the market, the real turning point comes not only from a single vote but from the gradual formation of a consensus on "where the policy floor lies."
