#FOMCWatch
Jerome Powell – Key Takeaways.
The economic outlook remains largely unchanged. Employment and inflation forecasts have barely shifted since the last meeting. The labor market is gradually cooling: layoffs and hires are low, labor demand has eased, and job growth has slowed sharply. The unemployment rate ticked higher in September. Recent payroll figures appear overstated by ~60,000 jobs per month.
Inflation is still somewhat elevated, partly because goods-price disinflation has reversed. Services inflation continues to ease, and long-term expectations remain anchored near 2%. Upside risks to inflation persist.
Household spending is solid, the economy is expanding at a moderate pace, and resilient consumption plus AI-related data-center investment is supporting business fixed investment. Any drag from the recent government shutdown should be recouped next quarter.
The three rate cuts already delivered are only beginning to flow through the economy and should help stabilize the labor market while keeping downward pressure on inflation. Short-term Treasury purchases continue to ensure good control of policy rates.Monetary policy is not on a preset path. Projections are uncertain, and decisions will be made meeting by meeting. The Fed is well positioned and can afford to wait for additional data before the January meeting.
Committee members agree inflation remains too high and the labor market is loosening further. No one’s baseline includes a rate hike. The discussion is between holding rates steady or continuing gradual cuts. Today’s decision reflects the ongoing cooling in labor-market conditions.
