Multiple Fed officials gave speeches and/or participated in Q&A events this week and the tone was markedly different than it was the last time they were out in force.  Here are a few highlights, paraphrased: Fed’s Kashkari Confident in path of inflation but don’t want to declare victory May take a year or two to achieve 2% goal If inflation surprises to the upside, that could affect rate cut plans Fed’s Schmid Remains to be seen how much more the Fed will cut and where rates may settle Fed’s Logan Seeing signs that the Fed may not need to cut rates as low as previously thought in order for inflation and job growth to be in balance. Fed’s Musalem There’s some sense of higher inflation risk and some sense the Fed may not cut rates as much Data since the last meeting suggests economy may be stronger than expected Fed’s Powell Economy sending signals that we don’t need to be in a hurry to cut rates Expects inflation to continue toward 2%, but it’s a bumpy path This isn’t necessarily surprising from the Fed, but it’s definitely a change from where their collective heads were at in September.  At that time, we’d just seen a few significantly weaker employment reports and inflation data that was more indicative of gradual improvement.  Since then, those weak employment numbers have been revised higher and inflation has ticked up. The Fed along with the rest of the financial market is waiting to see if the data will show a big of a resurgence of growth and inflation.  If that happens, rates could easily continue to move higher.  If data softens again, rates have room to recover to lower levels.  Either way, the data will be the determining factor–especially the jobs report in early December.

 

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