Federal Reserve

The Federal Reserve began the process of normalizing interest rates at the September 18th, 2024 FOMC meeting. While the timing of the first rate cut was telegraphed well in advance, the magnitude—25 or 50 basis points—was not. A week prior to the meeting, market pricing, as well as

With labor market risk rearing its head, Kashkari and Bostic sound dovish again.

A little bit of post-game analysis from Bowman and Waller. Waller defends 50 by pointing to the implications of the CPI and PPI data received during blackout period for core PCE.

“The time to support the labor market is when it’s strong, and not when you begin to see layoffs.”

We will be hoping for two things at the September meeting this week: a 50 bps cut and minimal upwards revisions to the unemployment rate projections in the Summary of Economic Projections (SEP).

Our new baseline is a 50 bps cut with a total of 75 bps of cuts in the SEP for 2024. It’s a close call but we think a 50 bps cut is more likely than a 25 bps cut. We think a 50 bps point cut is the right move.

It's the last week of Fedspeak before the blackout period for the September meeting. Everyone speaking this week is on board with Powell's assessment that the labor market is at least balanced.

Even though today’s report gave back some of the weakness in the July household survey, the reversion was slight. The August report meets the conditions we laid out yesterday for a 50 bps cut in September to play catch-up.

We see two individually sufficient conditions for the Fed to proceed with a frontloaded interest rate cut in September above 25 basis points: either (1) the unemployment rate is 4.2% or above, or (2) the prime-age 25-54 employment rate declines in both month-over-month and year-over-year terms. Back when we