Fed "hawkish" voices emerge, the risk of asset price collapse may become a new "roadblock" to interest rate cuts.

On November 21, concerns about financial market stability, including the risk of asset prices potentially falling sharply, are becoming a new topic for Federal Reserve officials to discuss the timing of interest rate cuts or even whether to cut rates. Federal Reserve Board Governor Lisa Cook cited a range of risks to the financial system, including the rapidly rising private credit market, hedge fund trading in the Treasury market, and the application of generative artificial intelligence in algorithmic trading. Cook also suggested that she would not be surprised by a collapse in asset prices that are at historically high levels. Cleveland Fed President Esther George reiterated her opposition to further rate cuts, as inflation remains too high, and stated that she believes loose financial conditions are another reason against cutting rates. Federal Reserve Governor Michael Barr said on Thursday that the Fed needs to be cautious when considering further rate cuts. Meanwhile, Chicago Fed President Austan Goolsbee expressed that he still has concerns about another rate cut in December. “Inflation progress seems to have stalled, if anything, and we’ve received warnings that it’s moving in the wrong direction,” Goolsbee said. “That makes me a bit uneasy.”