Delighted to have Colby Smith, Steven Kelly, & Gerard DiPippo on the podcast to discuss 2023 and look forward to what may happen in 2024. Having a Fed beat reporter, a financial stability expert, and an international man means plenty of 🔥🔥🔥 takes! directory.libsyn.com/episode/index/… (1/4)

John Williams of New York Fed sought to push back on speculation that the US central bank is considering imminent rate cuts on Friday, telling Steve Liesman that talk of a March move was 'premature'

New Financial Times piece on the Fed pivot and how it is piling pressure on Europe's central banks to shift towards a more dovish stance Sam Fleming (FT) & Martin Arnold

ft.com/content/12a6a9…

Strong signals from the Fed that hikes are over and rate cuts are coming has set off a surge in stocks/bonds

But at a time when the inflation outlook is so uncertain, economists warn this was exactly the kind of exuberant outcome the Fed needed to avoid ft.com/content/b8c0a3…

Powell says the Fed is aware of the risk that it will 'hang on for too long' in terms of waiting too long to cut rates.

'We're very focused on not making that mistake'

Powell is all but saying rates are on hold for an extended period. While officials 'do not view it as likely to be appropriate to raise interest rates further, neither do they want to take the possibility off the table'.

This paired with softer language in the policy statement about the conditions under which the Fed would consider in determining the extent of 'any' additional tightening to ensure a steady return to 2% inflation makes for a dovish decision to cap off the year

Fed officials see greater scope for interest rates to decline next year than in September, signalling 75bps worth of cuts from current levels

All eyes today will be on the Fed's updated SEP and how many cuts next year are pencilled in by officials.

Maintaining the same magnitude as September (50bps) would help to drive home the point that the Fed is not preparing anything imminent

ft.com/content/990024… Financial Times

On the latest CPI report, Omair Sharif says the data does not yet suggest the Fed has the 'all clear' and can conclude with confidence that inflation is moving back down to the 2% target in a sustainable way. He sees June as a plausible start to cuts ft.com/content/51111d…

A 0.3% monthly rise in core CPI for November reinforces the idea that the Fed will keep its policy rate steady at a 22-year high well into 2024, defying market expectations of earlier cuts ft.com/content/51111d… Financial Times

The challenge getting back to 2 percent over the forecast horizon depends largely on services. Core CPI rose 4%, with goods prices near 0 but services much higher as a result of shelter 6.5% and transportation 10.1%. Not expecting ff rates to come down as fast as market expects

It’s pushback week for the world’s top rate-setters, but will markets listen? Central banks prepare to rebuff investors over path of interest rates by pointing to tight labour markets ft.com/content/1fea39… via @ft Sam Fleming (FT) Colby Smith

At the final FOMC meeting of the year this week, Jay Powell faces a tough balancing act to maintain flexibility in the Fed's policy plans in the face of intense pressure to reveal when and by how much it intends to cut interest rates next year

ft.com/content/990024… Financial Times

Remember: Powell says the primary reason he's worried about wages is through their effect on core non-housing services. Wage growth in those sectors is running at 3-3.5% right now.

Stronger than expected payrolls data is not enough to compel the Fed to again raise interest rates next week, but it will likely bolster their stance that cuts are not on the table for quite some time ft.com/content/35fa30…

Underpinning expectations that the Fed stays on hold for this long is a forecast that core inflation will hover at 2.7% by end-'24 amid real GDP growth of 1.5%

'I still see a lot of momentum for the economy, so I don’t see a need for lowering rates right away' one economist said

In the latest Financial Times survey w/ Chicago Booth, 63% of the economists polled think the Fed will only begin to cut rates in the third quarter of next year or later and in 2024 move by just 50bps -- a stark contrast to current market pricing ft.com/content/8c8fdc… Eva Xiao

Less than two years after they were criticised for being late in responding to the most brutal surge in prices for a generation, central banks face pressure to pivot as inflation slows

Latest Financial Times read with Sam Fleming (FT) & Martin Arnold

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