FOMC Doves Emphasize Caution ... (1/3)

Per our pre-December FOMC communications compilation/analysis out earlier (PDF here), the post-November FOMC communications theme has been hawkish participants shifting in a dovish direction, and doves underlining that their medium-term rate outlooks are still relatively hawkish versus market expectations.

• FOMC speakers have re-emphasized lingering upside inflation risks and potential for further cuts - which suggests that the FOMC is unlikely to remove its tightening bias despite the apparent progress in the October jobs/inflation data released since the Nov 1 decision. That being said though, the idea that risks of over- versus under-tightening had come into better balance, suggesting an underlying bias to hold.
• Some commentary that arguably leaned surprisingly hawkish given that they came after the surprisingly soft October CPI data included multiple FOMC participants who have a dovish reputation: For instance, Boston Fed's Collins "I wouldn’t take additional firming off the table"; SF's Daly "we are not certain whether inflation is on track to return to 2%...I wouldn’t want to declare victory"; and Gov Cook "I see risks as two sided, requiring us to balance the risk of not tightening enough against the risk of tightening too much".
• NY Fed Gov Williams - another noted dove - said that "if price pressures and imbalances persist more than I expect, additional policy firming may be needed" despite policy now "estimated to be the most restrictive in 25 years".

Source: MNI