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[Hot News Recap: Fed Officials Advocate Gradual Rate Hikes; Midterm Elections May Change Inflation and Interest Rate Paths] 1. Two Federal Reserve officials on Thursday advocated for a moderate and steady pace of rate hikes to address inflation, which remains above target. This marks the first public statement from Fed officials since Democrats regained control of Congress and made progress in state elections. Cleveland Fed President Hamak stated that monetary policy needs to shift to a restrictive stance to bring inflation back to 2% in a timely manner; she favors more frequent, smaller adjustments to mitigate the impact on households, businesses, and financial markets. 2. Richmond Fed President Barkin also believes that gradual rate hikes are reasonable. He stated that inflation is "too high" and remains high without easing, making the policy implications quite clear. The Fed maintained its target range for the benchmark interest rate at 3.75% to 4.00% last week, despite acknowledging that inflation is higher than expected; the Fed raised rates in September, and the market widely expects another rate hike in December, but the path thereafter remains unclear. 3. The midterm election results may change the trajectory of price pressures. Besides the Democrats regaining control of Congress, voters in many states oppose building data centers, which may reduce demand for equipment and other inputs from tech companies, thus easing price pressures. Evercore ISI stated that approval challenges in large states like Texas will slow AI capital spending, reduce the risk of economic overheating in the next year or two, and may extend the AI investment cycle, reducing the need for further multiple rate hikes by the Federal Reserve. 4. However, Evercore ISI also pointed out that the tightening of AI-related financial conditions slightly tilts the balance towards another Fed rate hike. TD Securities still expects the Fed to raise rates by a cumulative 50 basis points by early next year, but stated that if the election results lead to an end to the Iran war or a cooling of AI investment, further tightening may not be necessary after March. 5. In the market, tech stocks fell sharply on Thursday, with the Nasdaq down 11.9% from its record high on October 6, and the S&P 500, Nasdaq, and Dow all experiencing their biggest single-day declines since April 3, 2025. Futures traders are still betting on a rate hike at the Fed's December 8-9 meeting, with a probability of about 68%, down from over 80% on Wednesday. 6. The U.S. jobs report will be released on Friday. The market expects 65,000 new jobs in October, up from 29,000 in September, with the unemployment rate expected to remain at 4.2%. BMO Capital Markets states that unless the jobs data is significantly weak, it is unlikely to disrupt the Federal Reserve's interest rate hike plans; as long as the unemployment rate remains near its current level, the Fed can still determine that the labor market is stable.