FED
In Committee communications since the September meeting, two themes have been notable.
- First, with Powell’s lead, participants have played down the perception that September’s 50bp cut represented a new normal. Powell’s comments that the committee doesn’t feel like it ‘s “in a hurry” to cut rates, while pointing out that the base case was 2 more 25bp cuts this year as per the Dot Plot.
- NY’s Williams also noted that 50bp isn’t “the rule” for future actions. Some have expressed openness for another outsized cut were the data to warrant it (Waller, Bostic) but it’s been fairly clear it’s not the base case for most participants unless data surprises are forthcoming.
- Second, there has been limited concern about the signal sent from the strong payrolls figure from the few participants we have heard from since its release on Oct 4.
- Far from worrying that they were wrong-footed in cutting 50bp in September, participants continued to portray the labor market as cooling overall, with the most recent employment report a positive development inasmuch as they did not desire to see further cooling.
- Below is our updated Hawk-Dove spectrum - see our full Minutes preview (PDF) for a summary of key FOMC commentary.
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