The path of the Federal Reserve's interest rate cut has been startled by a "crossroads"! Logan warns that the labor market must "cool down" and the internal battle between eagles and pigeons escalates

Recently, the top management of the Federal Reserve has made intensive speeches and outlined a policy blueprint full of differences and uncertainties. Against the background that inflation has not yet been completely tamed and the labor market is showing signs of weakness, the debate over the pace and extent of interest rate cuts has become increasingly heated. Dallas Fed President Logan, Vice Chairman Jefferson and Boston Fed President Collins each approach from different perspectives, pointing to a core contradiction: how to find a precise balance between curbing inflation and protecting employment. The debate over the direction of the U.S. economy is pushing the Federal Reserve towards a challenging policy crossroads.
Logan's hawks warn: labor market needs to be further "relaxed"
Dallas Fed President Logan made it clear on Tuesday (September 30) that the current U.S. labor market may need to weaken further to help the inflation rate fall steadily back to the target level of 2%. She emphasized that even if the impact of new tariffs on prices is excluded, core inflationary drivers are still stubborn enough to push the inflation rate to around 2.4%. Logan pointed out that the current monetary policy only constitutes a "moderate restriction" on the economy. Consumption resilience remains, asset prices are high, and confidence is gradually recovering, all of which require the Federal Reserve not to relax its vigilance prematurely.
In her speech, she repeatedly called for caution in cutting interest rates and bluntly said that "the room for further interest rate cuts may be relatively limited." She believes that the policy interest rate is already at the upper edge of the "neutral range". If interest rates continue to be cut, it may inadvertently turn to excessive easing, thus undermining the previous anti-inflation results. Logan supports creating enough "economic idleness" through marginal loosening in the labor market such as rising unemployment and shrinking working hours to create conditions for the eventual restoration of price stability.
Jefferson's concern: weak job market calls for policy support
In contrast to Logan's caution, Federal Reserve Vice Chairman Jefferson expressed deep concern Tuesday about the outlook for the job market. He expects U.S. economic growth to remain at around 1.5 percent and warned that "labor markets are weakening and could come under more pressure if they don't get support." Jefferson backed the decision to cut interest rates by 25 basis points in September as necessary to balance "persistently high inflation" with "rising risks in the job market."
He also noted that the Trump administration's new policies on trade and immigration have brought high uncertainty, and although the direct impact of tariffs on inflation is currently limited, their effects "will be further manifested in the coming months." Jefferson's remarks revealed a kind of policy flexibility, that is, while inflation is generally controllable, it should respond to labor market fragility in a timely manner.
Collins's Middle Way Philosophy: Oppose radicalism and support gradualism
Boston Fed President Collins proposed a "gradual easing" path in an interview on Tuesday.She warned that cutting interest rates too quickly or promising to continue to cut interest rates to neutral levels could reignite inflation risks and be contrary to the Fed's policy mission. She pointed out that the current financial environment still has a supporting effect on the economy. Although many aspects of inflation have eased, factors such as tariffs are still pushing up key prices.
Collins stressed that both risks of "persistent threat of inflation" and "signs of weakness in the job market" must be paid attention to and neither side should be neglected. She said the current environment allows the Fed to "calmly analyze data and gradually advance policies" without rushing to take aggressive interest rate cuts. This position is quite representative within the Fed. It is different from Logan's strong caution and from some officials 'calls for greater easing.
As the policy process deepens, differences within the Fed become increasingly open. At the September meeting, the new director Milan voted against cutting interest rates by only 25 basis points, advocating a one-time rate cut of 50 basis points; Vice Chairman of Financial Supervision Bowman also preferred more aggressive easing measures. At the same time, Cleveland Fed President Hamak and others remain highly vigilant about inflation and oppose loosening policies too quickly.
This coexistence of "hawks","doves" and "centrists" reflects the Fed's difficult choices between multiple goals. On the one hand, although inflation has fallen from a high point, the core driving force has not been eliminated, and the tariff policy has added more variables; on the other hand, the job market has shown signs of weakness, and if the policy response is slow, it may trigger an unnecessary increase in unemployment.
Summary: Walking on the tightrope between inflation and employment
Overall, the Federal Reserve is walking on an extremely thin policy wire: on the left is the inflation threat that has not yet been completely eliminated, and on the right is the labor market that is gradually showing signs of fatigue. Logan called for further "cooling" of the labor market in exchange for price stability, Jefferson paid attention to job market pressures and supported moderate interest rate cuts, and Collins advocated a gradual rather than radical easing path.
This big discussion around the "rhythm, range and end point of interest rate cuts" will not only determine the short-term direction of the U.S. economy, but will also test the Fed's ability to regulate complex economic situations in the post-epidemic era. As the October and December policy meetings approach, every official's statement and every data release may become key variables affecting market expectations and policy decisions.
Overall, market expectations for the Federal Reserve to cut interest rates by 25 basis points in October have warmed up. Interest rate futures show that the probability of a 25 basis point rate cut in October has risen to 97%, significantly higher than the previous day's 90%. Investors need to continue to pay attention.