A steady stream of speeches by Federal Reserve officials is increasing bets that Chair Jay Powell and his colleagues may bypass what has been a widely expected fourth and final rate cut of 2024 and take their time to decide how far and how fast they get inflation down its 2% target.
Gus Faucher hears what everyone else has heard in the past 24 hours. And he comes to the same conclusion when he takes time out to join me “on the road” at an event in Naperville, Illinois where he like me has been watching Fed chair Jay Powell speak at a “heard round the world” Dallas Fed event.
”I think the headline for me is that Powell is saying that rate cuts will not be automatic, that they will not necessarily be cutting the Fed funds rate every meeting, that they will continue to look at the data,” Gus says.
”They'll see where inflation is going, they'll see where the labor market is going, but it isn't a given that they will be cutting the Fed funds rate, that they will not necessarily be cutting the Fed funds rate at every meeting, that they will continue to look at the data, they'll see where inflation is going, they'll see where the labor market is going, but it isn't a given that they will be cutting the Fed funds rate, for example, when they meet in mid -December or when they meet early in 2025.”
Even so, Gus says his base case is still that the Fed will do another 25 bps rate cut as inflation continues on its “bumpy path” lower, as Chair Powell has described it, toward the 2% target. ”I still think it's most the most likely outcome is we do get a rate cut in December.”
So dive in and hear, see what Gus has to say. And why he says that the Fed can’t wait to see what policies Trump 2.0 puts in place in the months ahead, and instead has to make its policy moves based on the data it sees as 2024 comes to a close and the new year lies ahead.
Augustine (Gus) Faucher is senior vice president and chief economist of The PNC Financial Services Group, serving as the principal spokesperson on all economic issues for PNC.
Faucher is frequently cited in international, national, and regional media outlets including The Wall Street Journal and The New York Times. He serves on the board of directors of The Economic Club of Pittsburgh - the local chapter of National Association of Business Economics (NABE). He is also co-chair of the Financial Roundtable of NABE.
Faucher earned a Ph.D. in economics from the University of Pennsylvania, with concentrations in labor economics and public economics. He also has a Bachelor of Arts degree in Economics from Cornell University.
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