Powell reiterates old tune, Waller's stance is clear: Understand the attitudes of Federal Reserve officials towards a rate cut in December in one article

Will the U.S. cut interest rates in December?

On December 4th, Bank of America analysts Jonathan Pingle, Alan Detmeister, and Amanda Wilcox released a report looking ahead at the U.S. economy. The report shows that several Federal Reserve officials are cautiously signaling, with only Federal Reserve Governor Christopher Waller explicitly stating, "I tend to support a rate cut in December," while Jerome Powell reiterated his usual stance.

Other Federal Reserve officials, such as San Francisco Fed President Mary Daly and Fed Governor Lisa Cook, were also "non-committal" like Powell. Daly stated, "A rate cut in December is possible," while Cook mentioned, "Policy is not operating on a preset path."

Powell: The economy is robust, gradually moving towards neutral interest rates

Regarding the prospect of a rate cut, Federal Reserve Chairman Jerome Powell maintained his usual cautious attitude, speaking "without leaks." He stated that the U.S. economy is currently in good shape, expecting the Federal Open Market Committee (FOMC) to gradually lower interest rates to neutral levels. He reiterated:

"The data since the September FOMC meeting has alleviated some downside risks in the labor market, so the FOMC has flexibility in deciding the pace of removing policy restrictions."

However, he made almost no comments on the outcome of the December FOMC meeting. Powell said, "We want to send a strong signal: If the labor market continues to weaken, we will support (a rate cut). However, after the 50 basis point cut in September, the economy is stronger than we expected in September."

Waller: Tends to support a rate cut in December

In contrast to Powell's caution, Federal Reserve Governor Waller was clearly "straightforward," explicitly expressing his support for a rate cut in December. In a speech on Monday, Waller posed the question, "Cut or skip?" and answered, "At this point, I tend to support lowering the policy rate at the December meeting."

Waller emphasized that he would closely monitor other data and base his decision on whether to cut rates:

"As of today, I tend to continue the work we have started to bring monetary policy back to a more neutral environment."

Regarding the overall direction of development, he pointed out that although the short-term economic outlook may be somewhat unclear, the mid-term direction of monetary policy and policy rates is clear, which is 'a rate cut.'

He also stated that the motivation for the FOMC to continue cutting rates at the next meeting primarily stems from the restrictive nature of the current policy setting, "I believe there is ample evidence that the policy remains significantly restrictive, and another rate cut would only mean we won't slam the brakes as hard as before. Another factor supporting further rate cuts is that the labor market seems to have finally reached a balance, and we should strive to maintain that state."

However, he also cautioned that if policymakers' estimates of the target range by the end of next year are close to correct, the committee is likely to skip rate cuts multiple times in the process of achieving that goal.

Daly and Cook: There is uncertainty

Other officials were also "non-committal" like Powell. San Francisco Fed President Daly stated on Monday that a rate cut in December is possible:

"The economic situation is good, and the trajectory of policy interest rates is downward."

She also stated that the labor market is now completely balanced and is no longer a source of inflationary pressure; inflation does not have significant upward pressure and is gradually declining, but there is still more work to be done.

However, Dai did not explicitly indicate whether she would support a rate cut in December or maintain rates but merely pointed out that "policy needs to be continuously adjusted, whether in December or later."

Fellow Federal Reserve Governor Kugler emphasized the uncertainties regarding immigration flows, productivity, and trade policy, but he also stressed that policy does not operate on a preset path