The Federal Reserve is facing growing internal divisions over its monetary policy path amid persistent inflation concerns and global economic challenges. Recent statements from key officials reveal contrasting views on the timing and extent of potential rate cuts this year.

San Francisco Fed President Mary Daly has indicated a preference for implementing two rate reductions this fall, while Governor Christopher Waller has expressed support for an initial cut as early as July. In contrast, Chicago Fed President Austan Goolsbee has raised concerns about the inflationary impact of high tariffs implemented during the Trump administration.

According to analysis from Nomura Securities, if core Consumer Price Index (CPI) rises to 3.3% in the fourth quarter, rate cuts might be delayed until year-end with limited scope for reduction. This assessment has further heightened market uncertainty about the Fed's policy trajectory.

During a recent policy discussion, Fed Chair Jerome Powell acknowledged the U.S. economy's overall strength and near-full employment levels, while emphasizing that inflation remains stubbornly above the 2% target. The central bank has consequently maintained current interest rates, pledging to make data-driven adjustments moving forward.

Governors Michelle Bowman and Christopher Waller have suggested that rate cuts remain possible if inflation shows sustained decline, though market consensus currently points to September as the most likely timing for the first reduction. The Fed's cautious stance has already impacted global markets, with Taiwan's stock market experiencing significant declines and breaching its annual support level as investors shifted toward defensive stocks and small-to-mid cap equities.

Notably, buying momentum has begun recovering in companies related to artificial intelligence applications. As markets navigate this period of adjustment, investors are advised to closely monitor key economic indicators, adapt trading strategies, and stay attuned to shifting market dynamics. The coming weeks will require particular attention to Fed communications, inflation data, and sector-specific developments to inform investment decisions in this complex environment.