The internal discussion within the Federal Reserve has shifted from "when to cut interest rates" to "when to raise interest rates again."

According to the WSJ, there is a noticeable shift in the internal discussions at the Federal Reserve regarding the path of interest rates. After months of expectations for rate cuts, officials have begun to discuss "under what conditions a rate hike would be necessary." The report states that at the latest monetary policy meeting, three regional Fed presidents publicly opposed maintaining the policy wording that "the next step is more likely to be a rate cut."

Dallas Fed President Lorie Logan stated that future interest rate adjustments "could be a rate hike or a rate cut." The outgoing Fed Chair Powell also acknowledged that the Fed is gradually shifting from a "dovish" stance to a "neutral position," and stated that if a rate hike is needed in the future, the Fed would first shift to a neutral guidance before leaning towards rate hikes. The report points out that persistently high energy prices, the crisis in the Strait of Hormuz, and escalating tensions in the Middle East are once again raising inflation risks in the U.S., which has weakened market expectations for rate cuts this year.