Will interest rates continue to be cut in December? Collins and Logan remain cautious, the top three of the Federal Reserve are dovish.

Internal divisions within the Federal Reserve have re-emerged ahead of the December policy meeting, with several regional Fed presidents making speeches on whether to continue cutting interest rates in the face of high inflation and slowing job growth, highlighting different assessments of the economic outlook by the decision-making body. Boston Fed President Rosengren indicated in an interview that maintaining the current interest rate level is appropriate as inflation may remain high for an extended period. She noted that while the labor market has cooled slightly, the pace is not rapid, and unemployment has not significantly worsened. Rosengren emphasized that the Fed's current policy is balancing risks in the labor market with inflation risks, and she believes that after two consecutive rate cuts, the policy rate is closer to a neutral level that neither stimulates nor suppresses economic activity. She also mentioned that tariffs are still pushing up prices, and she expects inflation to remain elevated for the rest of this year and into next year. However, as the economy gradually absorbs the effects of tariffs, price pressures will slowly decrease. Rosengren also pointed out that the September employment data did not change her overall view, as job growth mainly came from industries like healthcare and leisure, and overall employment trends show a "mild cooling." Dallas Fed President Kaplan shares a similar cautious stance with Rosengren. She stated at an event in Zurich that she would find it difficult to support another rate cut in December unless there is clear evidence that inflation will decline faster than expected or that the labor market will cool rapidly. Kaplan believes that continuing to cut rates in an environment of increased uncertainty could lead to future re-tightening, causing financial and economic volatility, and therefore pausing rate cuts would allow policymakers to observe the actual effectiveness of current policy constraints. She also pointed out that asset prices rising and credit spreads narrowing in financial markets indicate that financial conditions remain accommodative, so policy rates need to counterbalance tailwinds from financial conditions. Kaplan also mentioned future balance sheet operations, suggesting that the Fed may resume asset purchases in the near future to ensure smooth functioning of money markets. She emphasized that such operations are technical measures and do not signal a change in monetary policy direction. In contrast, New York Fed President Williams signaled a more dovish stance. Speaking in Chile, he indicated that with more downside risks in the labor market and weakening upward pressure on inflation, he believes there is still "room" for further rate cuts in the near term. Williams noted that current monetary policy is in a state of "mild constraint" but is not as tight as it was in the past few months, so a moderate adjustment to the rate range could bring policy closer to a "neutral level." He emphasized the need for the Fed to ensure that it does not cause excessive harm to employment while reining in inflation back to the 2% target. Williams stated that tariffs contribute about 0.5 to 0.75 percentage points to overall inflation, but he has not seen them trigger a second round of inflation. He expects inflation to return to the 2% target level by 2027 and believes fiscal policy will provide some support for economic growth next year, although immigration and tariff policies may bring opposing pressures. Following Williams' speech, the financial markets reacted quickly, with interest rate futures data showing that investors' bets on another rate cut by the Fed in December increased from around 45% to 65%. Given that New York Fed Presidents usually align closely with the Fed chair, the market interpreted his remarks as a clear signal that the likelihood of a rate cut at the December meeting has significantly increased. After two consecutive rate cuts, it is clear that there are differences within the Federal Reserve on whether to continue easing policy. Some officials are concerned that inflation remains above target and lean towards a pause, while others believe that risks in the labor market are increasing and that policy should remain accommodative. Chair Powell did not make any more public statements before the December meeting, and how the Fed reaches consensus internally will be a focus of the market's close attention.