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MNI Fed Review-Jan 2025: Slightly Hawkish Hold

The FOMC's January meeting delivered a slightly hawkish hold, tipping the balance away from a March rate cut.
USCentral Bank ReviewHomepageFed - ReviewCentral Bank ReportsMarketsStoryNorth America

EXECUTIVE SUMMARY: 

  • The FOMC's January meeting delivered a slightly hawkish hold, tipping the balance away from a March rate cut but not really suggesting that the Committee's assessment of the monetary policy path had changed since the December meeting.
  • The Statement brought a hawkish market reaction upon release with its apparent signalling of greater concern over the path of inflation, but Chair Powell - in one of his more neutral press conferences - played down that interpretation, saying it was "not meant to send a signal".
  • It didn’t sound like Chair Powell's tone changed much since December's unambiguously hawkish cut, which in any case left the door open to a couple of cuts in 2025 as per the most recent median FOMC projections.
  • Asked by MNI if a March cut was still "on the table", Powell appeared to downplay the possibility without dismissing it outright: "the broad sense of the Committee is we don't need to be in a hurry to adjust the policy stance."
  • Rates markets saw 2025 implied cuts slightly pared after the Statement release, though Powell’s subsequent characterization of the statement changes and reiteration of the Committee’s easing bias reversed some of the initial hawkish move, particularly for rates beyond 2025. As it stands, there’s around 20% probability of a March cut (vs closer to 25% pre-meeting), with the first full 25bp reduction still not expected until June – for that matter, still just one full cut priced all year (45bp). 

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:

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EXECUTIVE SUMMARY: 

  • The FOMC's January meeting delivered a slightly hawkish hold, tipping the balance away from a March rate cut but not really suggesting that the Committee's assessment of the monetary policy path had changed since the December meeting.
  • The Statement brought a hawkish market reaction upon release with its apparent signalling of greater concern over the path of inflation, but Chair Powell - in one of his more neutral press conferences - played down that interpretation, saying it was "not meant to send a signal".
  • It didn’t sound like Chair Powell's tone changed much since December's unambiguously hawkish cut, which in any case left the door open to a couple of cuts in 2025 as per the most recent median FOMC projections.
  • Asked by MNI if a March cut was still "on the table", Powell appeared to downplay the possibility without dismissing it outright: "the broad sense of the Committee is we don't need to be in a hurry to adjust the policy stance."
  • Rates markets saw 2025 implied cuts slightly pared after the Statement release, though Powell’s subsequent characterization of the statement changes and reiteration of the Committee’s easing bias reversed some of the initial hawkish move, particularly for rates beyond 2025. As it stands, there’s around 20% probability of a March cut (vs closer to 25% pre-meeting), with the first full 25bp reduction still not expected until June – for that matter, still just one full cut priced all year (45bp). 

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:

Keep reading...Show less