Not going into December meeting with a sense that the outcome is preordained, coming data will be important; keeping options openStill an open question how fast and by how much rates need to be cut to keep inflation declining while avoiding undue damage to the job marketRisks to inflation, employment mandates are roughly in balance, justifies move towards neutral monetary policyIf going to err, will err on the side of being more restrictiveHas not yet decided on pace, extent of cuts for 2025Will have to wait and see how tariffs or other policies of new administration shape the economy; as conditions change monetary policy will adaptCompanies say there is not a lot of pressure to hire, but also not an expectation that labor market is going to weakenStill think policy rate is restrictiveDo not want people to conclude view that there must be a cut at every meetingEconomy on solid footing, nearing price stability with labor market at or around maximum employmentData and contacts suggest economic growth is cooling and pricing power continues to diminishDo not believe progress on inflation has stalled, though it has been bumpyUncertainties around health of job market, but analysis suggests it is cooling in an orderly fashionRisks to inflation, employment mandates are roughly in balance, justifies move towards neutral monetary policyAtlanta Fed’s base case is that inflation remains on track to reach 2%
The implied odds of a cut are 64% but those will swing this week based on data and Fed commentary. The blackout starts on Friday at midnight so look for a strong hint before then, though it might not come until Friday.
This article was written by Adam Button at www.forexlive.com.
