Recent Federal Reserve meeting minutes show that internal disagreements are widening, ultimately boiling down to a choice between two goals—prioritizing stable growth or maintaining price stability.

There is no perfect answer to this dilemma. Cutting interest rates can ease employment pressures, but the risk is a resurgence of inflation; not cutting or even continuing to raise rates can suppress prices, at the cost of higher unemployment. In this dilemma, the Fed’s historical preferences are quite clear. Looking back to the 1980s, the Fed aggressively raised interest rates to 24% to crush stagflation, a level that today’s environment simply cannot withstand.

Although such an extreme case of 24% is unlikely to recur, it reflects a reality: when inflation and employment goals conflict, the Fed tends to prioritize controlling prices. In other words, unless future data show overwhelming signals for rate cuts, maintaining high interest rates in the short term is more probable. This requires market participants seeking loose liquidity to be psychologically prepared.