FED

On Wednesday, October 23rd, the Fed released its "Beige Book," showing that since early September, economic activity across most Districts in the US has remained largely stable, with inflation continuing to slow down. Despite elevated uncertainty, contacts were somewhat more optimistic about the longer-term outlook.

On Monday, October 21, several FOMC officials weighed in on the outlook for monetary policy, with three members signaling support for a slower pace of rate cut. They advocated for a cautious, gradual approach toward achieving normal or neutral levels in policy rates. In contrast, San Francisco Fed Chair Daly suggested expectations for ongoing policy easing.

On October 15, San Francisco Fed President Mary Daly said that current interest rates remain far from neutral levels. The Fed might implement one or two additional rate cuts of 25 basis points each before the year's conclusion. However, Daly is open to the possibility of pausing rate cuts at one of the remaining two Federal Open Market Committee (FOMC) meetings this year.

According to the New York Fed's September Consumer Expectations Survey, consumers' one-year-ahead inflation expectation remains stable at 3%, while the three-year-ahead inflation expectation rises to 2.7% and the five-year-ahead expectation increases to 2.9%. Most labor market-related surveys remain stable.

Fed Governor Waller said Monday that the US economy could still run at a faster pace than expected, and the current data allows the Fed to proceed with moving policy toward a neutral stance at a deliberate pace.

Several Federal Reserve policymakers indicated on Thursday, October 10, that they were unfazed by a higher-than-forecast September inflation report, suggesting inflation is headed in the right direction. However, Atlanta Fed President Raphael Bostic said that he was totally comfortable with skipping a meeting if the data suggests that's appropriate.

The latest FOMC meeting minutes showed that officials were divided over the size of interest rate cuts last month. A substantial majority of participants supported lowering the target range for the federal funds rate by 50 basis points, while a few participants thought a 25 basis point move could be more appropriate. Most participants emphasized that the larger cut should not be interpreted as evidence of a less favorable economic outlook. In considering additional adjustments to the target range for the federal funds rate, they would carefully assess incoming data.

On Tuesday, October 8, Atlanta Fed President Bostic conveyed a relatively optimistic assessment of the current U.S. economic landscape. Boston Fed President Collins expressed heightened confidence in the persistent decline of inflation. Fed Vice Chair Jefferson indicated that he would closely monitor forthcoming data to evaluate potential adjustments to monetary policy rates.

On Thursday, September 26, Fed governor Cook said she supported the decision to cut the policy rate by 50 basis points as the upside risks to inflation have diminished, and the downside risks to employment have increased.