Will there be a rate cut in the U.S. in December?
On December 4, Bank of America analysts Jonathan Pingle, Alan Detmeister, and Amanda Wilcox released a report forecasting the U.S. economy, which showed that several Fed officials cautiously released signals, with only Fed Governor Waller being straightforward, stating, "I tend to support a rate cut in December," while Powell repeated his old tune.
Other Federal Reserve officials, like San Francisco Fed President Daly and Fed Governor Cook, also "hedged their bets," with Daly stating that "a rate cut in December is possible," while Cook remarked that "policy does not operate on a preset path."
Powell: The economy is robust, gradually moving towards a neutral rate.
Regarding the prospect of rate cuts, Federal Reserve Chairman Powell maintained a consistent cautious attitude, speaking "without leaks," stating that the U.S. economy is currently in good shape, and he expects the Federal Open Market Committee (FOMC) to gradually lower rates to neutral levels. He reiterated:
"The data since the September FOMC meeting has alleviated some downside risks in the labor market, so the FOMC has flexibility in deciding the pace of removing policy restrictions."
However, he hardly commented on the outcome of the December FOMC meeting. Powell said, "We want to send a strong signal: If the labor market continues to weaken, we will support (rate cuts). However, after a 50 basis point cut in September, the economy is stronger than we expected in September."
Waller: Tends to support a rate cut in December.
Compared to Powell's caution, Fed Governor Waller was clearly "blunt," explicitly expressing support for a rate cut in December. In his speech on Monday, Waller posed the question of "rate cuts or skipping?" and answered, "Currently, I tend to support lowering the policy rate at the December meeting."
Waller emphasized that he would closely monitor other data and decide whether to cut rates based on it:
"As of today, I tend to continue the work we have already started, bringing monetary policy back to a more neutral environment."
Regarding the overall direction of development, he pointed out that although the short-term economic outlook may be unclear, the medium-term direction of monetary policy and policy interest rates is clear, namely "rate cuts."
He also stated that the motivation for the Federal Open Market Committee to continue cutting rates at the next meeting primarily stems from the degree of restrictiveness of the current policy setting, "I believe there is ample evidence that policy remains significantly restrictive, and another rate cut would only mean we won't slam the brakes as hard as before. Another factor supporting further rate cuts is that the labor market seems to have finally reached equilibrium, and we should strive to maintain that state."
However, he also reminded that if policymakers' estimates for the target range by the end of next year are close to correct, then the committee is likely to skip rate cuts multiple times in the process of achieving this goal.
Daly, Cook: There is uncertainty.
Other officials, like Powell, also "hedged their bets." San Francisco Fed President Daly said on Monday that a rate cut in December is possible:
"The economic situation is good, and the trajectory of policy interest rate changes is downward."
She also stated that the job market is now completely balanced and no longer a source of inflationary pressure; inflation does not have significant upward pressure and is gradually declining, but there is still more work to be done.
However, Daly did not explicitly state whether she would support a rate cut in December or maintain rates, only pointing out that "policy needs to be adjusted continuously, whether in December or later."
Similarly, Fed Governor Cook emphasized the uncertainties around immigration flows, productivity, and trade policy, but he also stressed that policy does not operate on a preset path.
