Back to ZeroHedge for the closer, September 17:
Wall Street Reacts To Powell's "Risk-Management" Rate Cut
....And while Powell is scrambling to preserve some credibility (especially since exactly one year ago he cut 50bps when the economy was much stronger), here is a snapshot of some of the first comments hitting the tape:
Ali Jaffery, CIBC Capital Markets
Peering through the dot plot, there’s more division than today’s rate-cut vote suggests. The FOMC is likely divided on its views on the US economy, with some favoring faster easing on risks to the job market (and perhaps other motivations as well), but others are clearly worried about managing through a stagflationary outlook, which is why the overall pace of rate cuts is still far from aggressive. Chair Powell has a tough act to follow in trying to speak on behalf of the committee.
Seema Shah, chief global strategist, Principal Asset Management:
Next year’s dot plot is a mosaic of different perspectives and is an accurate reflection of a confusing economic outlook, muddied by labor supply shifts, data measurement concerns, and government policy upheaval and uncertainty. Overall, though, today’s measured 25 basis point cut allows the Fed to get ahead of a slowdown without overreacting to early signs of strain.
Ira Jersey, Bloomberg Intelligence
In the press conference, will Powell push against the relatively dovish tone? The last few meetings, the opening remarks have been quite neutral, as we showed in our NLP model earlier in this blog. It seems likely he’s at least a tad more dovish, and if not that could be somewhat surprising to the market... The skew of the Dot plot remains for slower cuts this year, but the median year-end 2026 dot not only moved lower, but there are now five members who see rates below 3%. We had thought the median would be 3.125%, which would have required just one more member at 3.125% to get there. Overall, we think this is a relatively dovish statement with the SEP.
Gregory Faranello, head of US rates strategy for AmeriVet Securities
The tone overall favors growth concerns right now as the Fed is showing rates still coming despite inflation remaining above the 2% target. The lack of more dissents shows more unity around the pathway to more neutral rates. Overall, a steadfast, methodical pathway down to neutral.
Bob Michele, JPMorgan Asset Management Head of Global Fixed Income
Only one dissent was surprising and it shows the Fed “locked arms” to reduce policy from what was surprisingly restrictive to them
Anna Wong, Bloomberg Economics
The widely anticipated 25-bp cut showed divisions on the committee. While the median participant expects two more 25-bp cuts this year, almost half of the FOMC expects just one or no more cuts this year. The policy statement and updated Summary of Economic Projections (SEP) display several other interesting contradictions. The policy statement added language to flag increasing downside employment risks, while acknowledging that inflation has moved up. In contrast, officials marked up their growth estimate this year, and lowered the unemployment rate estimates in the SEP forecast horizon.,,,
....MUCH MORE
For what it's worth, we pay attention to Ms. Wong's thinking on the Fed and suchlike.
Earlier today via ZH - "The Fed’s Roadmap Matters More Than the Cut"
