Fed's Bostic is saying:
- Eventually got behind the cut this week
- Dual mandates are in tension
- supported a cut because it still feels we are in restrictive territory.
- Need to get inflation to 2%.
- Lesson half of upward price pressure is being reported as from tariffs.
- We have to see more progress before comfortable getting rates to neutral.
- Really like Powell's fog analogy, preferable to go lower one uncertain
- Also we are not completely flying blind.
- Some of the labor market shift is due to structural changes like technology, immigration, trade policy
- Recession risk is not on people's minds
- Glad chair Powell added words saying December rate cut not a foregone conclusion.
- Accurately reflected range of views on the committee.
- That info needed to be out in public domain.
- Every meeting is live
- The median of the Dot plot is math, it's not decision process.
- We are going to be data -dependent and make sure decision is appropriate.
- Difficult to make a forecast now, everyone trying to do their best, we may have different interpretations.
- Data can help us come to a closer agreement on where the world is so we can coalasce on policy.
- We will need to double down on that effort to get data in coming weeks.
Meanwhile Cleveland Fed's Hammack is also speaking and she says
- She would not have cut rates.
- Challenged on both sides of mandate.
- Some emerging signs of softness in the labor market, including layoff announcements.
- Now around estimate of neutral rate
- Says that rates are barely restrictive
- Need to maintain some restriction to bring down inflation.
- Tariffs are just one piece of inflation puzzle, also electricity, insurance.
- Little to no progress on core services ex housing, which plus the tariff creates more concerning picture
- All of us going out into Fed districts, getting a robust picture of economy.
- Don't want to under state importance of gold standard government data.
- September cut was because of sharp drop in payrolls.
- Since September, data to me says it's not obvious shift in the labor market. The change is on demand-side.
- Still time until December meeting, more data to come.
- Consumption data has been healthy, though seen K-shaped economy.
- Hearing more about pressure from lower income families.
- Want to be attentive to labor picture.
- Want to be open-minded to seeing signs of labor market softness.
- We are missing on inflation side more than on labor side.
- We need to stay restrictive.
- Market tends to over focus on medium Fed rate path dot.
- The Dot plot gives you a sense of range of viewpoints.
- You are hearing different viewpoints because it's not clear what the right answer is.
- It's a robust conversation at the Fed.
- In the FOMC room, people change their viewpoints, adapt
Both Bostic and Hammack are nonvoting members in 2025. Hammack will be a voting member in 2026, while Bostic will be a voting member in 2027. However both are leaning toward the hawkish camp - or less dovish. .
Stocks are dipping with the Dow industrial average now negative at -0.08%. The S&P is still up by 0.21% while the NASDAQ index is up 0.64%.
The Fed is driving in the fog.
