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FED: Looking To Broader Labor Conditions, Hint Of Stalling Disinflation?

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With the expected 25bp cut to 4.50-4.75%, the November FOMC Statement contains some limited changes (PDF link of comparisons here):

  • We've been asked about why the FOMC removed the language "The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent". This is a logical removal: remember September's statement noted the Committee had gained “greater confidence” because it was their long-stated criteria to start cutting rates - which of course they did. There's no need to say so again.
  • Also in September, they had changed the assessment of risks to employment/inflation to be “roughly in balance” (vs prior statements that said they continued to move into better balance). That's unchanged in November's statement.
  • They have also tweaked the first line of the third paragraph to say that "in support of its goals", the Committee decided to cut rates - eliminating language on the "progress on inflation and the balance of risks".
  • We'd expect they have done so for similar reasons to the "greater confidence" removal - however in conjunction with the first paragraph's change removing "further" from "inflation has made further progress toward the Committee’s 2 percent objective but remains somewhat elevated" perhaps adds a small hint that they are less satisfied with inflation progress of late. Though we would expect Powell to clarify this change in the press conference.
  • The other change is "since earlier in the year, labor market conditions have generally eased", replacing "Job gains have slowed" - indicating perhaps also that they are looking to broader labor market conditions (and the unemployment rate, which retains its place in the statement) without taking too much signal from Nonfarm Payrolls in light of recent volatility.
  • And of course, no dissenters this time, with Gov Bowman agreeing to a 25bp cut (vs her dissent against the 50bp cut in September).
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With the expected 25bp cut to 4.50-4.75%, the November FOMC Statement contains some limited changes (PDF link of comparisons here):

  • We've been asked about why the FOMC removed the language "The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent". This is a logical removal: remember September's statement noted the Committee had gained “greater confidence” because it was their long-stated criteria to start cutting rates - which of course they did. There's no need to say so again.
  • Also in September, they had changed the assessment of risks to employment/inflation to be “roughly in balance” (vs prior statements that said they continued to move into better balance). That's unchanged in November's statement.
  • They have also tweaked the first line of the third paragraph to say that "in support of its goals", the Committee decided to cut rates - eliminating language on the "progress on inflation and the balance of risks".
  • We'd expect they have done so for similar reasons to the "greater confidence" removal - however in conjunction with the first paragraph's change removing "further" from "inflation has made further progress toward the Committee’s 2 percent objective but remains somewhat elevated" perhaps adds a small hint that they are less satisfied with inflation progress of late. Though we would expect Powell to clarify this change in the press conference.
  • The other change is "since earlier in the year, labor market conditions have generally eased", replacing "Job gains have slowed" - indicating perhaps also that they are looking to broader labor market conditions (and the unemployment rate, which retains its place in the statement) without taking too much signal from Nonfarm Payrolls in light of recent volatility.
  • And of course, no dissenters this time, with Gov Bowman agreeing to a 25bp cut (vs her dissent against the 50bp cut in September).