Federal Reserve officials signal cautious easing, reducing the list of chairman candidates to five people.

Several top officials of the Federal Reserve recently signaled a "conditional rate cut" in their public speeches, showing that decision-makers are delicately balancing between addressing economic slowdown and inflation pressures. Meanwhile, the list of candidates for the next Federal Reserve Chair has been narrowed down to five individuals. St. Louis Fed President Moseley supported the 25 basis point rate cut implemented last month on Friday, stating that it was a "precautionary measure taken to address weakness in the labor market." He emphasized that monetary policy still needs to be cautious to prevent excessive easing leading to a rebound in inflation risks. Moseley pointed out that around 10% of the current inflation comes from the impact of tariffs, which is expected to gradually fade away in the second half of next year. He added that if the job market continues to deteriorate, further rate cuts are not ruled out, but the "room for easing is limited." On the same day, Federal Reserve Governor Wall also expressed support for further rate cuts in an interview, but stressed the need to proceed cautiously. He noted that the U.S. labor market may be shedding jobs while the Gross Domestic Product (GDP) continues to show strong growth, signaling a divergence in the economy. "Either the labor market warms up to match the GDP growth rate, or economic growth slows down to accommodate the deceleration in employment," Wall said. "In either case, it will affect the direction of monetary policy." At the September policy meeting, the Federal Reserve lowered the benchmark interest rate by 25 basis points for the first time since December 2024, and hinted at one or two more cuts by the end of the year in the dot plot. Wall expressed satisfaction with this pace but opposed larger adjustments. His new colleague, Governor Milan appointed by President Trump, advocated for a one-time 50 basis point rate cut and hoped for a total of 1.25 percentage points cut by the year-end. It is reported that Wall is currently one of the five candidates for the Federal Reserve Chair. U.S. Treasury Secretary Bennett recently held lengthy meetings with Wall and will submit the final list of candidates to Trump after completing the second round of interviews. When selecting candidates, Bennett emphasized the importance of candidates having an open mind toward monetary policy and possessing rich experience in economics, regulation, and institutional management. Senior Treasury officials revealed that the final five candidates include: current Vice Chair of Supervision at the Federal Reserve Michelle Bowman, Governor Christopher Wall, White House Council of Economic Advisers Director Kevin Hasett, former Federal Reserve Governor Kevin Wash, and Chief Investment Officer of BlackRock's Global Fixed Income, Rick Reed. Although Reed has not served at the Federal Reserve, he has gained favor for his profound insights into the bond market and media exposure. Bennett recently publicly criticized the Federal Reserve for being "bloated and inefficient," advocating for a reassessment of its policy framework and functional boundaries. He hopes the new Chair will push for the central bank to "trim down" and reduce reliance on unconventional tools like quantitative easing. According to sources from the Treasury Department, the second round of interviews is expected to begin after Thanksgiving, with the earliest possible nomination submission in January 2026. The term of current Chair Powell will expire in May next year.