After last week’s rate cut by the Federal Reserve Open Market Committee, two regional Federal Reserve Bank (FRB) Presidents who currently are not on the voting committee came out against further rate cuts (aside from the NYFRB president, the others alternate their voting membership on the committee).
Dallas Fed President Lorie Logan criticized last week’s cut and warned against another cut in December at a speech on October 31 at FRB Dallas’s “The Evolving Landscape of Bank Funding” event. She said:
The FOMC’s long-run strategy calls for a balanced approach to our two objectives. I carefully weigh the potential labor market costs of measures to reduce inflation. But labor demand and supply remain in balance. The FOMC already mitigated downside risks by cutting rates at its previous meeting, in September. The remaining risks to employment are ones we can monitor closely and respond to if they are becoming more likely to materialize, not ones that currently warrant further preemptive action. For those reasons, I did not see a need to cut rates this week. And I’d find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labor market will cool more rapidly.
During another event at the same conference, Cleveland FRB President Beth Hammack discussed rates during a “fireside chat,” saying:
I would have preferred to have held rates steady at this meeting. I do think we need to maintain some amount of restriction to help get inflation back down to target.
Federal Reserve Board Chairman Jerome Powell also attempted to tamp down expectations for further rate cuts in December, explaining to the post-FOMC meeting press conference that “A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it.”
Action Line: Your Survival Guy is not in the interest rate prediction business. With uncertainty surrounding the future, you need a plan you are comfortable with with rates rise or fall, or remain steady. When you want to talk about your investment plan, email me ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
