“IN A GREAT PLACE”
The US Commerce Department reported earlier on Friday that inflation, based on the Fed’s preferred measure, was 2.4 per cent last month, less than what economists polled by Reuters had expected.
The Personal Consumption Expenditures Price Index excluding volatile food and energy items, which the Fed uses to gauge underlying momentum in prices, rose 2.8 per cent, in line with what Fed Chair Jerome Powell said he was anticipating when he embraced a “cautious” approach on further rate adjustments in his post-meeting press conference on Wednesday.
The data prompted financial markets to firm up bets on a Fed rate cut in March, with one more reduction seen as probable by September. Before the release of the report, traders had given only about even odds on a second Fed rate cut by the end of 2025.
“I think we’re in a great place, well-positioned” for what lies ahead,” New York Fed President John Williams said in a separate interview with CNBC, adding that his baseline expectation continues to be that further rate cuts are coming.
Like Goolsbee, Williams said he had factored in some thinking on the likely impact of Trump’s agenda into his own forecasts, but said there was still a lot of uncertainty.
“We need to be data-dependent, and we have time to really assess the data, assess what’s happening, and come to the best judgments.”
In a statement explaining her dissent this week, Hammack said she felt the economy’s strength argued against another rate cut at this time, and she wanted to hold the policy rate steady until there is more evidence that inflation is resuming its path toward the 2 per cent target.
