The data released on Thursday shows that the US CPI inflation in September exceeded expectations, marking a halt in the recent inflation decline process. Analysts believe that the higher-than-expected inflation data, combined with the strong performance of last week's US non-farm payrolls report, may intensify the discussion on whether the Federal Reserve will choose a slight rate cut next month or pause after a significant rate cut in September.

On Thursday, several senior officials from the Federal Reserve spoke out. Most of them believe that while US inflation has not yet reached 2%, they are confident that inflation is moving in the right direction and are not too worried about the CPI inflation report in September being higher than expected. However, non-hawkish Atlanta Fed President Bostic said that given the recent mixed data, he remains absolutely open to pausing rate cuts in November.

Looking at the latest dot plot released by the Federal Reserve in September, Fed officials plan to cut interest rates by another half percentage point by the end of the year, with many saying they are monitoring developments in the labor market.

Although US September inflation exceeded expectations across the board, the initial jobless claims data released that day soared to a one-year high, with investors placing more emphasis on the impact of a slowing labor market. Traders are betting that the probability of a 25 basis point rate cut in November has risen to over 80%.

The third figure of the Federal Reserve: the downward trend in inflation remains quite solid.

Williams, the third figure of the Federal Reserve and the President of the New York Fed, stated that the inflation rate has not yet reached the 2% target, but he is confident that inflation is moving in the right direction. Despite some hiccups, the overall trend of declining inflation in the US remains quite solid. Inflation cooling is common, and various labor market indicators suggest that labor is unlikely to be a source of pricing pressure.

Williams believes that the risks of achieving inflation and employment goals have been better balanced, painting a picture of a balanced US economy. Over time, transitioning monetary policy towards neutrality is appropriate. Shifting to a more neutral monetary policy stance as progress is made towards price stability will help maintain a strong economy and labor market. The Federal Reserve will continue to make policy decisions based on economic data.

Williams praised the usa labor market for remaining robust despite cooling off over the past year. He pointed out that this should provide the Federal Reserve with room to adjust interest rates to a level that neither hinders nor stimulates the economy.

Chicago Fed President: Not very worried about CPI higher than expected in September

Chicago Fed President Goolsbee stated that the latest usa inflation data largely matched expectations. The overall trend indicates a significant decrease in inflation levels. He is not very concerned about the higher-than-expected CPI inflation report in September.

Goolsbee stated that he fully agrees with Federal Reserve Chairman Powell's previous views. More reflection is needed on the Federal Reserve's dual mandate. Goolsbee insists that the Federal Reserve is no longer solely focused on price pressures. "The overall trend over 12 to 18 months is clearly - inflation is significantly decreasing, the labor market has cooled, and the labor market has reached what we consider full employment levels."

Goolsbee said the Federal Reserve must take a longer-term view and closely monitor current economic data. He mentioned the need to focus on data such as job vacancies, turnover rates, and hiring rates.

Goolsbee is considered more inclined to support rate cuts than many of his Federal Reserve colleagues. He stated that in recent months, the Federal Open Market Committee (FOMC) has experienced a series of evenly matched meetings on rate cuts. He expects that in future FOMC meetings, there may be more similar evenly matched meetings within the Federal Reserve.

Richmond Fed President: Increasing Confidence in Controlling Inflation

Richmond Fed President Barkin stated that the inflation rate is shifting in the right direction. Inflation levels have significantly decreased, but it is premature to declare victory over inflation. There is increasing confidence in controlling inflation.

Barkin said the Fed should have started raising rates in 2021. If the Fed had raised rates earlier, there would have been no need for a rapid and substantial increase. The Fed is trying to balance the risks facing the job market and inflation.

Barkin expects that lowering interest rates will bring the risk of heating up demand in the real estate market. The speed of growth in U.S. housing demand may exceed the supply level.

Barkin also mentioned that the increase in U.S. debt will bring the risk of rising borrowing costs.

Atlanta Fed President Bostic: Open to pausing rate cuts in November.

This year, voting Atlanta Fed President Bostic supported the substantial 50 basis point rate cut last month and at that meeting, he expected another quarter-point cut later this year. Bostic recently stated that he fully supported the decision to cut rates by half a percentage point last month because the Fed has kept rates at a 20-year high for quite some time.

Bostic said on Thursday that based on the economic outlook, he believes it is reasonable to cut rates at both of the next two meetings this year or at one of them, but recent mixed data suggests, "Maybe we should pause in November. I'm absolutely open to that. If the data comes in as I expect, I would be willing not to take action at one of the last two meetings."

Bostic said, "I believe we have the ability to be patient and let things evolve a bit longer. I think some of the content in today's CPI report confirms this view."

Bostic also said that he had long expected monthly fluctuations in economic data, which could make identifying underlying trends complex. However, the latest data has not changed his expectation that the Fed will need to cut rates several times next year.

I have always said that we should expect data to fluctuate - I have always used the word "unstable". We may occasionally receive unstable reports. But the question is, do they indicate a new trend?

According to Bostic, the so-called neutral interest rate, which neither stimulates nor slows down economic growth, is between 3%-3.5%. He expects interest rates to drop to near this level next year. "This is a journey towards neutrality, where the subtle differences are moving 25 basis points here, 50 basis points there, I do not think these are very important."

Editor/Lambor