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FED: Key Inter-Meeting Fed Speak: It's Time To Cut, But 50bp Not Mentioned (1/2)

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From our wrap-up of Key Inter-Meeting FedSpeak out yesterday  (PDF Here): the FOMC’s key message going into the September meeting has been clear: rate cuts are set to begin. But there remains significant uncertainty about how rapid or extensive the easing cycle will be.

  • The key communication of the inter-meeting period was of course Chair Powell’s Jackson Hole speech, in which he said emphatically that “The time has come for policy to adjust”, citing increasing labor market risks: "we do not seek or welcome further cooling in labor market conditions…we will do everything we can to support a strong labor market as we make further progress toward price stability."
  • Multiple other FOMC officials made it clear that they would support initiating rate cuts in September. Two of the most influential Committee members – NY Fed’s Williams and Gov Waller – both gave speeches on Sep 6 after the August payrolls data that addressed the need to cut now (Williams “it is now appropriate to dial down the degree of restrictiveness in the stance of policy”; Waller’s speech title “The Time Has Come”).
  • Despite speculative market pricing to the contrary, an outsized 50bp cut wasn't actively promoted by any member of the Committee even if the lingering debate appears to be by what size to cut in September.
  • Some hawks, including Gov Bowman and KC Fed Pres Schmid, seem persuadable on the need for a first cut in September but even though they are likely to go along with the Committee’s decision, it seems they don’t see any particular rush to ease. However, we haven’t heard from them since the August payrolls release.
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From our wrap-up of Key Inter-Meeting FedSpeak out yesterday  (PDF Here): the FOMC’s key message going into the September meeting has been clear: rate cuts are set to begin. But there remains significant uncertainty about how rapid or extensive the easing cycle will be.

  • The key communication of the inter-meeting period was of course Chair Powell’s Jackson Hole speech, in which he said emphatically that “The time has come for policy to adjust”, citing increasing labor market risks: "we do not seek or welcome further cooling in labor market conditions…we will do everything we can to support a strong labor market as we make further progress toward price stability."
  • Multiple other FOMC officials made it clear that they would support initiating rate cuts in September. Two of the most influential Committee members – NY Fed’s Williams and Gov Waller – both gave speeches on Sep 6 after the August payrolls data that addressed the need to cut now (Williams “it is now appropriate to dial down the degree of restrictiveness in the stance of policy”; Waller’s speech title “The Time Has Come”).
  • Despite speculative market pricing to the contrary, an outsized 50bp cut wasn't actively promoted by any member of the Committee even if the lingering debate appears to be by what size to cut in September.
  • Some hawks, including Gov Bowman and KC Fed Pres Schmid, seem persuadable on the need for a first cut in September but even though they are likely to go along with the Committee’s decision, it seems they don’t see any particular rush to ease. However, we haven’t heard from them since the August payrolls release.