[News] Officials Urge Caution on Rate Cuts ahead of Fed’s November Decision

Following the Federal Reserve cut rate by 50 basis points in September, the November monetary policy decision is approaching, and Federal Reserve officials will enter a blackout period after October 26. Below is a summary of key remarks from Fed officials following the September monetary policy meeting regarding future monetary policy:

Mary Daly: “I haven’t seen any information that would suggest we wouldn’t continue to reduce the interest rate consistent with achieving that durable expansion.” “This is a very tight interest rate for an economy that already is on the path to 2% inflation, and I don’t want to see the labor market slow further.”

Christopher Waller: “This data is signaling that the economy may not be slowing as much as desired. While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting.”  “Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year.”

Jeffrey Schmid: “Absent any major shocks, I am optimistic that we can achieve such a cycle, but I believe it will take a cautious and gradual approach to policy. While I support dialing back the restrictiveness of policy, my preference would be to avoid outsized moves, especially given uncertainty over the eventual destination of policy and my desire to avoid contributing to financial market volatility.”

Neel Kashkari: “Right now I am forecasting some more modest cuts over the next several quarters to get to something around neutral, but it’s going to depend on the data.”

Overall, the comments from Fed officials reflect a cautious yet accommodative stance toward future monetary policy. While some officials emphasize the importance of continued rate cuts to support economic growth, there is also a clear focus on closely monitoring data and maintaining flexibility in response to economic developments. The path ahead for monetary policy seems to favor a gradual and measured approach, with a strong emphasis on avoiding excessive market volatility and ensuring the economy remains on a sustainable growth trajectory.