By Howard Schneider and Ann Saphir (Reuters) – U.S. central bankers on Tuesday said they continue to believe inflation is heading down to their 2% target and signaled support for further interest rate cuts ahead, but none pushed strongly for or against doing so when they next meet to set rates in two weeks. “We […]
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Fed policymakers steer clear of December rate-cut guidance
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By Howard Schneider and Ann Saphir
(Reuters) – U.S. central bankers on Tuesday said they continue to believe inflation is heading down to their 2% target and signaled support for further interest rate cuts ahead, but none pushed strongly for or against doing so when they next meet to set rates in two weeks.
“We have to continue to recalibrate policy – now, whether it will be in December or sometime later, that’s a question we’ll have a chance to debate and discuss in our next meeting,” San Francisco Fed President Mary Daly said on Fox Business Network. “I think we need to have an open mind here.”
Speaking at a Crain’s “Power Lunch,” Chicago Fed President Austan Goolsbee similarly gave little away on his view of the likely outcome of the central bank’s upcoming Dec. 17-18 meeting.
“Over the next year it feels to me like rates come down a fair amount from where they are now, but we meet every six weeks because the conditions change,” Goolsbee said.
Fed officials have been wary of giving too much guidance about how policy is likely to evolve, particularly since President-elect Donald Trump’s victory in last month’s U.S. election.
Trump’s promises of import tariffs, tax cuts and an immigration crackdown could change the economic outlook in the coming months.
Still, as Daly, Goolsbee and Fed Governor Adriana Kugler, who also spoke on Tuesday, said, the Fed can’t react to policies that haven’t yet been promulgated. They all they are following the incoming data closely as they weigh upcoming decisions
The next two weeks are chock full of key reports, including the monthly job market report on Friday and a read on November consumer inflation a week from Wednesday.
“I view the economy as being in a good position after making significant progress in recent years toward our dual-mandate goals of maximum employment and stable prices,” Kugler told the Detroit Economic Club. “The labor market remains solid, and inflation appears to be on a sustainable path to our 2% goal.”
On Monday, Fed Governor Christopher Waller said he was leaning toward another rate cut this month. Fed Chair Jerome Powell on Wednesday will give what are expected to his last public remarks before the meeting.
Financial markets are pricing in about a 70% chance of a quarter-of-a-percentage point interest-rate cut this month, which would bring the policy rate to the 4.25%-4.50% range. They are betting on another two rate cuts by the end of next year, a slower pace than Fed officials had projected in September.
Fed officials will update those rate-path projections in two weeks at the close of their final policy-setting meeting of the year.
(Reporting by Howard Schneider and Ann Saphir; Editing by Paul Simao and Jonathan Oatis)