The labor market appears to have stabilized, GDP growth is comfortably above the economy’s long term non-inflationary growth potential of 1.9%, and inflation is above the 2% target. This mix of economic variables has created three groups within the FOMC. Those favoring lower rates are convinced inflation will moderate in coming months, so waiting to lower the Funds rate only puts the labor market at risk of slowing needlessly. The second group is more concerned about inflation since it remains well above the FOMC’s 2% target. The third group agrees with those...
