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Powell Has Eyed BoC's Conditional Pause

FED
As we await the Bank of Canada decision, which may involve a 25bp hike after a long pause since the last one in January: just an observation that at the FOMC press conference on Feb 1, Powell specifically cited the BoC when he was asked about the prospect of pausing rates and signalling it could hike at a later date (which is what most expect the FOMC to do next week).
  • Powell dismissed the idea but said that the Bank of Canada provided an example of holding fire but keeping open the possibility of a future hike based on conditionality - something like what the BoC may deliver on today (or in July).
  • From the transcript:
  • Q: I wonder, was there any discussion today of the possibility of pausing rate increases and then restarting them? Lorie Logan from the Federal Reserve Bank of Dallas seemed to suggest that would be a possibility in a recent speech. And I wonder if that view is broadly shared on the Committee...I mean, would it be possible to take a meeting off, for example, and then resume? You know, could you, rather than just doing at every meeting that move, go a little bit more slowly, take some gaps in between moves?
  • CHAIR POWELL. I mean, I think this is not something that the committee is thinking about or exploring in any kind of detail. In principle, though, you know, we used to—the thing we used to do was go every other meeting, if you remember, 25 basis points, and that was considered a fast pace. So I think a lot of options are available. And I mean, you saw what the Bank of Canada did and, you know, they left it that they’re willing to raise rates after pausing. But this is not something that the Federal Open Market Committee is on the point of deciding right now.
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