FED
The Statement contains several changes, none particularly surprising in their own right apart from perhaps the minimal change to the language used in the forward guidance (which in any case achieves the purpose of signalling that further cuts are ahead):
- Job gains have "slowed" (was "moderated"), "and the unemployment rate has moved up but remains low". The inflation characterization has changed to reflect that it has "made further progress" towards the Fed's target but the language that it "remains somewhat elevated" remains. These are not consequential changes.
- More notably, in new language, "The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent", while noting that its dual mandate goals "are roughly in balance" (was "continue to move into better balance").
- Along with the semi-surprise 50bp cut, the tweak to forward guidance is minor: changing "additional" to "any": "In considering any additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks".
- The FOMC also firmly codifies its concern over the labor market by adding "supporting maximum employment and" to "The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective."
- Gov Bowman dissented in favor of a 25bp cut - becoming the first Governor to dissent in almost 20 years, and the first dissent to a rate move since June 2022.
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