Progress on inflation has slowed relative to what we wantedWe don’t know what the incoming administration will do, so for me it’s about the dataRisks to the outlook are equally balancedI saw this cut as a close callThe recalibration phase is now overNow you wait watchfully before making further cutsMy projection is it will take many fewer rate cuts next year than we had thoughtI was comfortable with the median outlookWe’re really working towards a soft landingI see policy in a position supporting both goals, lowering inflation but not breaking the labor market
This is hawkish stuff. This is what markets read between the lines with Powell and now one of his mouthpieces is spelling it out. She normally tilts dovish but isn’t sounding that way at all today.
The market is already there with a 90% chance of no move in January and near 50/50 for March. We’ll get three non-farm payrolls and CPI reports before then so there is plenty to come.
This article was written by Adam Button at www.forexlive.com.
