Internal divisions within the Federal Reserve are intensifying.

Intensive speeches by Fed officials have added uncertainty to the Fed's interest rate cutting outlook. On September 25 Eastern Time, Kansas City Fed President Jeffrey Schmid and Chicago Fed President Austan Goolsbee both expressed concerns that excessive rate cuts could hinder inflation's return to the Fed's 2% target.

In contrast, Fed Vice Chair Michelle Bowman stated on the same day that inflation is approaching the target and the labor market is more fragile than expected, providing justification for further rate cuts. New Fed board member Stephen Miran proposed achieving neutral interest rate levels through a series of "very brief, 50 basis point cuts each time."

This reflects significant disagreements among Fed officials regarding the future path of rate cuts. According to CME's "Fed Watch," as of 06:30 Beijing time on September 26, the probability of the Fed maintaining rates unchanged in October is 14.5%, while the probability of a 25 basis point cut is 85.5%. For December, the probability of maintaining rates unchanged is 4.3%, with a 35.4% probability of a cumulative 25 basis point cut and a 60.4% probability of a cumulative 50 basis point cut.

**Fed Officials' "Hawkish" Statements**

On September 25 Eastern Time, Schmid stated in a Dallas speech that U.S. inflation remains too high, and while the labor market has cooled, it remains broadly balanced. He believes the current policy stance is only slightly restrictive, which is where it should be.

Regarding future interest rate adjustments, Schmid indicated he would take a "data-dependent approach," closely monitoring inflation and labor market data.

Regarding last week's 25 basis point rate cut decision, Schmid stated: "I think this was reasonable risk management. My view is that inflation levels are still too high, and while the labor market has cooled somewhat, it overall maintains supply-demand balance."

Schmid explained that while he worries inflation might be sticky and could rise to 3% rather than fall to the Fed's 2% target, recent weak employment data convinced him that the job market could deteriorate more "substantially or suddenly" than expected.

On the same day, Goolsbee also expressed unease about aggressive rate cuts in a Michigan speech. He worried that rapid rate cuts could impede inflation's return to target.

Goolsbee stated: "If we're in an environment where inflation has been above the 2% target for nearly five consecutive years and continues to worsen, then simply hoping inflation is temporary (to justify rate cuts) makes me uncomfortable."

Goolsbee further pointed out that the current environment shows signs of stagflationary shocks, calling this the worst-case scenario the Fed might face when balancing its dual mandate.

He indicated that if data shows the U.S. economy is on a path to maintain stable full employment with inflation likely returning to 2%, then rates could fall significantly further from current levels.

Goolsbee noted that Thursday's U.S. GDP data did not change his view on growth trends. The Fed's monetary policy is now only moderately restrictive. The Fed is uncomfortable with inflation in the middle of the 2%-3% range. While the Fed stands pat and inflation rises, the effect is similar to rate cuts.

However, Goolsbee left room for further rate cuts, stating that if economic data supports it and stagflation risks recede, more rate cuts could still be implemented. If data indicates the U.S. can maintain stable full employment with inflation returning to 2%, he believes rates could be lowered considerably from current levels.

Goolsbee said he hasn't seen second-round price effects from tariff policies. Long-term inflation expectations remain anchored, reflecting confidence in the Fed. Multiple labor market indicators show moderate employment cooling.

**"50 Basis Point Cuts Each Time"**

In stark contrast to cautious voting committee members, Fed Vice Chair Bowman and new board member Miran advocate for more aggressive rate cutting measures.

On September 25 Eastern Time, Bowman clearly stated at a Georgetown University event that inflation is sufficiently close to the Fed's 2% target, and the labor market is more "fragile" than expected, providing justification for further rate cuts.

Bowman emphasized that inflation is within the Fed's target range. She believes tariff policies' impact on price increases may be one-time.

As a Trump nominee, Bowman previously warned policymakers face serious risks of "falling behind the curve," noting that job growth has averaged only about 25,000 per month since April, well below year-beginning levels. She stated "it's time for the committee to take decisive, proactive action."

Miran advocated even more aggressively for immediate larger rate cuts. He stated Thursday that the current 4% to 4.25% federal funds rate is significantly above neutral levels.

In a media interview that day, Miran stated: "This is why monetary policy needs to be adjusted faster, not slower, which is particularly important now. When monetary policy is in such a restrictive stance, the economy's vulnerability to downside shocks increases significantly. Since we're already seeing cracks, there's no reason to continue taking risks—we must start adjusting faster, not slower."

Miran emphasized that officials could quickly implement a series of larger rate cuts to return to neutral levels as soon as possible, rather than proceeding slowly throughout the year.

Miran explicitly proposed achieving neutral interest rate levels through a series of "very brief, 50 basis point cuts each time," totaling 150 to 200 basis points in reductions. As the only dissenting vote at last week's FOMC meeting, he advocated for a 50 basis point cut rather than 25 basis points.

Additionally, San Francisco Fed President Mary Daly stated she "fully supports" the Fed's rate cut decision last week and expects further rate cuts ahead.

Daly claimed she doesn't believe the U.S. economy will fall into recession and denied the economy is heading toward "stagflation." She pointed out that excluding tariff-driven goods inflation, current inflation is approximately 2.4% to 2.5%, which while still above the Fed's 2% target, is gradually approaching it. While the labor market has cooled and can no longer be called strong, she wouldn't call it "weak" either.