- Additional policy easing may be needed over time
- There is uncertainty over neutral rate, it could be between 3-4%
- Expects moderation in economic growth and hiring
- Labor market no longer a source of inflation risk
- Monetary policy is well positioned for what lies ahead
- Too much policy easing carries risks
- Fed is currently well-above neutral
- It’s possible to pause on cuts at upcoming Fed meetings
- Will wait to see data before deciding on December meeting
- Easing too much, too soon is a greater risk than too little
Musalem is a 2025 vote and he’s heading into the new year on a hawkish note. That’s not a surprise as he’s been more of a hawk since he got the job.
Fed funds is at 4.50-4.75% and the market is pricing in a 70% chance of a cut. The ISM services report and the Beige Book later today could swing those odds.
This article was written by Adam Button at www.forexlive.com. Source