"Powell acknowledged "strongly differing views" on the committee about a December rate cut and stressed that another move by year-end is "not a forgone conclusion - far from it." Between the lines: It sure sounds as if this was the most heated closed-door policy debate in quite some time - though the signs that there's deeper division within the central bank have been evident for a while, if you know where to look."
"It's hard to recall such an explicit effort by the Fed chair to correct market pricing - all but telling traders that they had become overly confident about another rate cut on the way. And it implies that, unless economic data breaks to more clearly indicate whether the job market or inflation is the bigger problem, Powell and his successor will face internal resistance to bringing rates down much further."
"By the numbers: Markets had all but fully priced in a December rate cut, with 88% odds heading into the meeting, per the CME FedWatch tool. Powell's jawboning achieved its goal, and moves in futures markets since the press conference have brought those odds down to 71%. Reality check: The consensus around three rate cuts has always been more fragile than some of the analyst notes (and futures market pricing) would suggest."
Federal Reserve officials publicly acknowledged sharply divergent views on a potential December rate cut and emphasized that another rate move by year-end is not assured. Market expectations shifted after Powell signaled caution, reducing odds of a December cut from roughly 88% to 71% in futures. September projections showed a slender median expectation of three 2025 cuts, but the committee split roughly 10-9 on that path. Several regional Fed presidents have warned that rising inflation risks argue against further easing. Rotating reserve bank voting and the distribution of hawkish voices temper the likelihood of immediate rate reductions.
Read at Axios
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