Aside from Waller, most of the Federal Reserve officials who spoke this week have taken a cautious stance regarding December actions…
Federal Reserve officials stated on Tuesday that they still believe inflation is moving toward the 2% target and hinted at support for further rate cuts, but no one strongly supported or opposed a rate cut for the next meeting in two weeks.
San Francisco Fed President Daly stated, "We must continue to recalibrate policy, which is something we will have the opportunity to discuss and debate at our next meeting, and I think we need to keep an open mind here."
Chicago Fed President Goolsbee was similarly tight-lipped about what the Federal Reserve's upcoming meeting on December 17-18 might yield. Goolsbee said, "In my view, rates will come down quite a bit from current levels over the next year, but we meet every six weeks because conditions are constantly changing."
The comments from these two officials are broadly in line with those of several other policymakers who spoke this week, who clearly indicated that they expect the Federal Reserve to continue cutting interest rates next year, but did not express commitment to a rate cut in December.
Federal Reserve officials have been careful to avoid giving too much guidance on how policy might evolve, especially after Trump's victory last month, as his commitments regarding import tariffs, tax cuts, and immigration may change the economic outlook in the coming months.
As stated by Daly, Goolsbee, and Fed Governor Kugler, who also spoke on Tuesday, the Federal Reserve cannot react to policies that have not yet been enacted. They are all closely monitoring upcoming data to weigh the decisions to be made.
In the next two weeks, the United States will release several important reports, including the monthly non-farm employment report to be released on Friday and the November CPI data to be released next Wednesday.
Kugler stated, "I believe the economy is in good shape after significant progress in recent years toward achieving the dual goals of full employment and price stability. The labor market remains strong, and inflation appears to be moving sustainably towards our 2% target."
This week, only Fed Governor Waller indicated that he leans towards another rate cut this month. Fed Chair Powell will speak at 2:45 AM Beijing time on Thursday, which will be his last public address before the December meeting.
Financial markets expect about a 70% chance that the Federal Reserve will cut rates by 25 basis points this month, which would bring the policy rate down to a range of 4.25%-4.50%. They are betting that the Federal Reserve will cut rates two more times before the end of next year, which is slower than the pace predicted by Fed officials in September. Fed officials will update these rate path forecasts at the end of this year's final policy meeting in two weeks.
