Remarks of Officials

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.

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.

On Thursday, the European Central Bank released the September meeting minutes. Owing to a weaker economy, easing prices, and lower wage pressures, further rate cuts are inevitable. It was mentioned that a gradual and cautious approach currently seemed appropriate because it was not fully certain that the inflation problem was solved.

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 Wednesday, the Committee reached a consensus to reduce the Official Cash Rate (OCR) by 50 basis points to 4.75% as expected, marking the second consecutive rate cut. The monetary policy statement showed that the New Zealand economy is now in a position of excess capacity and economic activity is sluggish. The Committee agreed that excess capacity has dampened inflation expectations and that price and wage changes are now more in line with a low-inflation environment.

On Tuesday, the Reserve Bank of Australia's (RBA) meeting minutes showed that the current level of the cash rate best balanced the risks to inflation and the labour market. Given the considerable uncertainty about the economic outlook, each of the outcomes of rate cuts, leaving the current rate unchanged, and rate hikes were conceivable. The Board remained vigilant to upside risks to inflation.

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.