MNI China Daily Summary: Tuesday, December 10

MNI BRIEF: China Nov Exports Slows, Imports Slide

MNI BRIEF: China Crude Oil Imports Accelerate In November

CHINA NOV EXPORTS +6.7% Y/Y VS MEDIAN +8.9% Y/Y: CUSTOMS

MNI: CHINA YTD EXPORTS +6.7% Y/Y IN YUAN TERM: CUSTOMS

MNI: PBOC Net Injects CNY90.3 Bln via OMO Tuesday

MNI: GERMAN NOV CPI +2.2 % Y/Y

MNI: NORWAY NOV CORE CPI +0.1% M/M, +3% Y/Y

MNI: NORWAY NOV CPI +0.3% M/M, +2.4% Y/Y

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

FED: Statement: No Firm Expectations For New Rate Guidance

FED
USGlobalEM BulletCentral Bank NewsFederal ReserveEmerging Market NewsBulletMarketsFixed Income BulletsForeign Exchange BulletsRegionNorth America

September's revised FOMC Statement is likely to take a back seat to the rate decision and Dot Plot, but there are a few elements to watch for:

  • Economic Conditions: The opening paragraph describing current economic conditions could remove the reference to the unemployment remaining "low";  For inflation, there could be a dovish shift regarding “progress” – perhaps not as far as what Gov Waller called “considerable and ongoing progress” toward 2%, but some form thereof.
    • Several officials have noted that the risks to achieving the Fed’s goals have moved into balance – we would expect the new statement to reflect this. A more aggressive form would include a nod to the balance of risks having shifted toward the employment side and away from inflation.
  • Forward Guidance: Along with announcing that it “decided to lower the target rate” by 25bp or 50bp, the Fed will have to update its forward guidance. Here, it is likely to remain fairly open-minded and not steer to a particular sequence or size of cuts. As Gov Waller put it earlier this month, “I am open-minded about the size and pace of cuts, which will be based on what the data tell us about the evolution of the economy, and not on any pre-conceived notion of how and when the Committee should act.”
    • Powell also used language that could be translated into new forward guidance: “The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
    • The final line of the 3rd paragraph ("The Committee is strongly committed to returning inflation to its 2 percent objective.") could change to reflect an emphasis on both sides of the dual mandate.
    • There are varying Sell-Side expectations for the change in the Statement's forward guidance, ranging from relatively cautious to more overt signaling that future cuts are coming - but always couched in data-dependent language. These include: “In considering any further adjustments” ... "In considering the pace of further reductions" ... "the timing and pace/size of future rate cuts" ... "The Committee expects that further / a series of reductions in the target range will be appropriate."
  • Dissents: No dissents are expected to a 25bp cut. In the event of a 50bp reduction, though, we could plausibly see one or two dissents in favor of a 25bp cut. Most attention in the 50bp cut case is on Gov Bowman, a hawk who could mark the first dissent by a Governor in almost 20 years.
422 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

September's revised FOMC Statement is likely to take a back seat to the rate decision and Dot Plot, but there are a few elements to watch for:

  • Economic Conditions: The opening paragraph describing current economic conditions could remove the reference to the unemployment remaining "low";  For inflation, there could be a dovish shift regarding “progress” – perhaps not as far as what Gov Waller called “considerable and ongoing progress” toward 2%, but some form thereof.
    • Several officials have noted that the risks to achieving the Fed’s goals have moved into balance – we would expect the new statement to reflect this. A more aggressive form would include a nod to the balance of risks having shifted toward the employment side and away from inflation.
  • Forward Guidance: Along with announcing that it “decided to lower the target rate” by 25bp or 50bp, the Fed will have to update its forward guidance. Here, it is likely to remain fairly open-minded and not steer to a particular sequence or size of cuts. As Gov Waller put it earlier this month, “I am open-minded about the size and pace of cuts, which will be based on what the data tell us about the evolution of the economy, and not on any pre-conceived notion of how and when the Committee should act.”
    • Powell also used language that could be translated into new forward guidance: “The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
    • The final line of the 3rd paragraph ("The Committee is strongly committed to returning inflation to its 2 percent objective.") could change to reflect an emphasis on both sides of the dual mandate.
    • There are varying Sell-Side expectations for the change in the Statement's forward guidance, ranging from relatively cautious to more overt signaling that future cuts are coming - but always couched in data-dependent language. These include: “In considering any further adjustments” ... "In considering the pace of further reductions" ... "the timing and pace/size of future rate cuts" ... "The Committee expects that further / a series of reductions in the target range will be appropriate."
  • Dissents: No dissents are expected to a 25bp cut. In the event of a 50bp reduction, though, we could plausibly see one or two dissents in favor of a 25bp cut. Most attention in the 50bp cut case is on Gov Bowman, a hawk who could mark the first dissent by a Governor in almost 20 years.