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“When will the Fed slow its rate hikes? When will the Fed pause rate hikes? And when will the central bank pivot and start cutting rates? Powell gave somewhat encouraging remarks in one out of three in [Wednesday’s] press conference.
The possibility of slowing the pace of rate hikes may be near, he hinted. By contrast, Powell downplayed the outlook for a pause or pivot.
‘It is very premature to be thinking about pausing,’ he said. ‘People when they hear ‘lags’ think about a pause. It is very premature, in my view, to think about or be talking about pausing our rate hikes. We have a ways to go.’
A pause and pivot, in short, are nowhere on the immediate horizon. A slowdown in the pace of hiking, however, may be approaching, perhaps as early as the next FOMC meeting on Dec. 14.
‘As we come closer to that level and move further into restrictive territory, the question of speed becomes less important,” he explained. “And that’s why I’ve said at the last two press conferences that at some point it will be important to slow the pace of increases. So that time is coming, and it may come as soon as the next meeting or the one after that. No decision has been made.’”
Another Federal Reserve FOMC meeting in the books resulted in another 0.75% increase in rates. That was no surprise; however, we can look to the statement and press conference for clues. Powell seemed to be deliberately hawkish in the press conference, but the statement for release included a new sentence that noted the committee “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
That reads dovish to me. It’s a hint that they may make an effort to tap the brakes before hitting a terminal speed and careening the economy over the cliff.
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