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Convoluted Fed SEP Tips Three 2024 Cuts, Higher Core Inflation, Higher Neutral
The Fed kept rates on hold Wednesday. Obviously.
I say "obviously," but it's worth recalling that a March rate cut was almost fully priced not so long ago. The market was pushing the issue pretty hard earlier this year.
The Fed pushed back at the last meeting, effectively ruling out a move in March. Subsequent developments, including a couple of inflation overshoots and cautious rhetoric from officials, succeeded in coaxing market pricing back in line with the December dot plot, which implied
Definitely not “the Fed’s finest communication moment.” Hard to know where to start. He was inconsistent w/ past comments about financial conditions. He was borderline (?) incoherent at times. Frankly, he struck me as disingenuous. He’s made up his mind to cut rates and he’ll obfuscate about inflation, etc. when necessary to justify the decision. He doesn’t care what he said a few months ago about data dependency, etc. Something very unusual is going on w/ the Fed and markets.
The market’s sure loved Powell’s statement, how can that square with 3 rate cuts this year?