Financial Associated Press, November 20 (Editor: Xia Junxiong) On Tuesday (November 19) local time, Kansas Federal Reserve President Esther George stated that although the Federal Reserve's initial rate cut reflects confidence in the easing of inflation, it is still uncertain how far interest rates will drop.

The Federal Reserve cut rates by 50 basis points and 25 basis points at the September and November rate meetings, respectively, lowering the target range for the federal funds rate to 4.5%-4.75%.

George spoke at the Omaha Chamber of Commerce on Tuesday, stating: "The decision to cut rates reflects an increasing confidence in the inflation moving towards the Federal Reserve's 2% target, partly stemming from recent signs of balance in the labor and product markets."

George said that while the move towards the 2% inflation target means now is an appropriate time for a rate cut, "how much further interest rates will decline or what the final level will be remains to be seen."

In the Federal Open Market Committee (FOMC), George's stance is hawkish, but she will not have a vote on monetary policy until next year.

The Federal Reserve's next meeting is scheduled for December 17-18. The CME Group's FedWatch tool shows that traders currently bet on a 55.5% probability of policymakers cutting rates by 25 basis points in December, while the probability of no rate cut is 44.5%.

George did not mention in her speech whether she supports a 25 basis point rate cut in December; her remarks mainly focused on demographic and productivity issues, which may alter the fundamental dynamics of inflation and influence monetary policy in the long term.

Regarding the current federal government spending issue, George stated that large fiscal deficits will not trigger inflation, as the Federal Reserve will do everything possible to ensure inflation remains at the 2% target level.

But he also warned that this may mean "interest rates will remain high for a long time," thus it is crucial for the Federal Reserve to maintain independence when formulating monetary policy.

"Government policymakers are likely hoping that deficits do not lead to rising interest rates, but history shows that adhering to this impulse often leads to rising inflation," George said.

(Financial Associated Press, Xia Junxiong) $ACA