His remarks are likely to be the last before a period of silence for Fed policymakers that begins Saturday ahead of the Dec. 17-18 meeting. Prior to his comments, investors had been guided by expectations of a third consecutive rate cut at that meeting.
Comments from some of Powell’s top colleagues this week pointed in that direction, with Gov. Christopher Waller saying Monday that he was “leaning toward” a cut at the next meeting, even as others refused to commit to that outcome in advance. .
Powell’s remarks on Wednesday appear to align him with that more cautious bloc of policymakers and largely echo his last public appearance in mid-November, when he said the Fed could deliberate “carefully” on its rate cuts and that I didn’t have to be in a hurry.
Inflation and employment data since then, and Waller’s comments in particular, have substantially raised market expectations of another quarter-point cut in the benchmark rate, to a range of between 4.25% and 4.50. %. Powell’s comments on Wednesday did not change this much.
The Fed chair has stressed the need for the central bank to keep its options open at a time of heightened uncertainty about the shape of broader economic policy in the coming year, some concern that its progress on inflation will falter. has stagnated and evidence that the feared fall in the labor market has been avoided.
On Wednesday, the heads of the regional banks of Richmond and Saint Louis stuck to that approach of keeping all options open.
Saint Louis Fed President Alberto Musalem said at a monetary policy conference hosted by Bloomberg: “I keep all options open.” He added that he will examine incoming data before deciding whether it is necessary to lower rates again in two weeks.
Richmond Fed President Thomas Barkin said on CNBC’s CFO Council that he believes both inflation and employment are headed in the right direction, but with more data to come before the meeting, he won’t prejudge the outcome. .
A key measure of inflation, the personal consumption expenditures price index, which excludes food and energy costs, has ranged between 2.6% and 28% since May, well above the 2% target. set by the central bank.
Although Fed officials routinely state that they believe price pressures are still poised to ease, with a real-time slowdown in housing costs in particular not yet reflected in lagging government data, They will also want evidence of this before cutting rates much further.
