Fed Chair Powell wants to give the Fed control of the outcome, not the markets: Roger Ferguson

Fed Policy & Market Outlook - The Fed cut rates by 25 basis points, but the possibility of a further rate cut in December is uncertain due to differing views within the committee [1] - Markets may have been overly optimistic about future rate cuts, as the Fed aims to maintain control over outcomes rather than being driven by market expectations [6][7] - The Fed acknowledges dissension within its ranks, stemming from differing tolerances for inflation above the 2% target and unacceptably high unemployment [5][15] Stagflation Concerns - There are concerns about a potential mild stagflation scenario, with a weakening job market and inflation stuck around 3% year-over-year [8][9] - Inflation remains well above the 2% target, and the labor market's weakness presents a mystery regarding the balance between supply and demand factors [10] - Monetary policy may have limited ability to address labor market issues primarily driven by supply-side factors like declining labor force participation and reduced immigration [10] AI & Economic Impact - The Fed acknowledges the limitations of its tools in addressing specific unemployment issues, particularly those potentially caused by AI-driven layoffs [12][13] - The impact of AI on employment is not yet evident in aggregate data, but the Fed is monitoring the situation [15] - The Fed's tools are too blunt to effectively tamp down on potentially excessive capital expenditure in the AI space, which is driven by expectations of high returns [16][17]