Fed Officials Divided on Rate Cut Pace
Recent statements from Fed policymakers have shown a lack of consensus on the future trajectory of interest rates. While Fed Governor Adriana Kugler backed the recent half-point rate cut, other officials like Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic have voiced more cautious opinions regarding the pace of future rate cuts.
Market Adjusts Rate Cut Expectations
Traders are currently pricing in a 57.4% probability of another 50-basis point cut at the Fed’s November meeting, slightly lower than previous estimates. This shift in market expectations underscores the significance of upcoming economic data, especially the weekly U.S. jobless claims report, in assessing the health of the labor market.
Crucial Fed Speeches to Shape Market Sentiment
The focus in the market has now shifted to a series of speeches from Fed officials scheduled for later today. Fed Chair Jerome Powell’s highly anticipated pre-recorded remarks at a New York conference, along with speeches from New York Fed President John Williams and other key Fed governors, will be closely watched.
Inflation Concerns Arise Among Fed Officials
Fed Governor Michelle Bowman recently outlined her divergence from the latest rate decision, adding a layer of complexity to the monetary policy outlook. Bowman expressed worries about potential inflationary pressures, advocating for a more cautious approach to rate cuts.
She cautioned that the aggressive 50-basis point cut could be viewed as a premature signal of success in maintaining price stability. Bowman emphasized that inflation continues to exceed the Fed’s 2% target, with core inflation standing at 2.6%.
Her position underscores the delicate balancing act that the Fed must perform between promoting economic growth and ensuring price stability. The differing opinions within the Fed indicate that future policy choices may be subject to heated discussions, potentially leading to heightened market uncertainty.
Source : www.fxempire.com