... As Hawks Capitulate ... (2/3)

In contrast, Govs Bowman and Waller - once and arguably still toward the most hawkish end of the FOMC spectrum - have both softened their tone substantially.

• On Nov 28 Bowman noted "I remain willing to support raising the federal funds rate at a future meeting" - a far cry in FedSpeak terms from "I continue to expect that we will need to increase the federal funds rate further" three weeks earlier.
• And Waller has become "increasingly confident that policy is currently well positioned", and set rate markets alight on Nov 28 by pointing out potential for rate cuts: "if we see this inflation continuing for several more months - I don’t know how long that might be, three months, four months, five months - that we feel confident that inflation is really down and on its way, that you can then start lowering the policy rate just because inflation’s lower.”
• Both SF’s Daly and Cleveland’s Mester - a dove and a hawk respectively - agreed that the current configuration of monetary policy is "in a good place".
• That’s therefore probably how the FOMC will frame communications at next week’s meeting, with a cautious signal on future rate cuts (and solely in the Dot Plot and not the statement), and remaining open to the idea that policy may have to tighten further (in the forward guidance).