Source: Wall Street News Authors: Zhang Yaqi, Li Dan

On Wednesday, October 9th, Eastern Time, several regional Fed presidents continued to express their support for the Fed's rate cut. Although the Fed initiated an easing cycle in September with a 50 basis point rate cut, these officials did not show a preference for further substantial rate cuts.

Among them, Mary Daly, President of the San Francisco Fed and FOMC voting member this year, expressed full support for the decision to cut rates by 50 basis points in September. The rate cut in September does not indicate the speed and extent of future cuts, and the Fed may cut rates one to two more times for the remainder of the year.

Daly stated that the U.S. job market has slightly cooled and entered a more sustainable rhythm. "I do not want to see further slowing in the labor market." Daly is quite confident that inflation will fall to the Fed's target of 2%. She mentioned that business contacts are cautiously optimistic about the economic outlook.

Susan Collins, President of the Boston Fed with FOMC voting rights in 2025, stated that the Fed's decision to cut rates by 50 basis points in September was a "cautious" move under current economic risks as inflation falls and the economy becomes more vulnerable to shocks. Subsequently, rates may need further adjustment.

"I believe that in this context, the initial 50 basis point rate cut is a cautious move because monetary policy is still in a tight range. Further adjustments may be needed."

Collins largely reiterated her comments from Tuesday, including her belief that decision-makers should take a "cautious, data-driven approach" to rate cuts. She emphasized once again that Fed policy has no predetermined path.

Dallas Fed President Lorie Logan, who will have FOMC voting rights in 2026, expressed support for a gradual rate cut as the Fed policy normalizes from its highest level in over 20 years.

Logan stated that she continues to focus on the inflation and employment aspects of the Fed's dual mandate, and believes that there are still risks in the current US economy, proving that a more cautious policy approach is reasonable.

Tomorrow evening, the US CPI data for September will be released, which will be an important data affecting rate cut expectations and the trend of US stocks. Currently, it is widely expected by the media that the overall CPI for September will increase by 0.1% on a month-on-month basis, and the core CPI is expected to increase by 0.2% month-on-month.

Although not having monetary policy voting rights this year, Logan indicated her support for the decision to lower borrowing costs at the central bank's September meeting.The Federal Open Market Committee (FOMC)In September, the first rate cut since the outbreak of the pandemic was implemented, with a larger-than-expected reduction of 50 basis points.

"Following last month's half-point cut in the federal funds rate, from now on, adopting a more gradual approach to returning to a normal policy stance may be appropriate to best balance the risks to our dual mandate goals."

Currently, there are diverging views on the magnitude of future rate cuts. More than half of the Fed officials believe that there should be a further 50 basis point cut this year, which means the Fed will cut rates by 25 basis points at the remaining two meetings. Seven officials support only one rate cut, that is 25 basis points, and two officials expect no further rate cuts.

Logan agrees with the easing of inflation and states that deflation is a common phenomenon. Despite a slight cooling in the labor market, it remains healthy. She adds that monetary policy still remains restrictive and is likely to continue to drag on the demand for housing and other services.

"Inflation and the labor market are just a step away from our target. Easing policies will help prevent an excessive cooling of the labor market, thereby bringing the inflation rate back to the target level in a sustainable and timely manner."

However, she points out that there are various uncertainties in the outlook, and there are still some upside risks to inflation, so it is necessary to lower interest rates at a more cautious pace.

"I still believe that the inflation rate may stay above our target of 2%, which is a significant risk."

Editor/Lambor