Provided by: Lindsey M. Piegza, Ph.D., Chief Economist
In October the Fed opted to lower rates for the third time in three months. While the decision itself was largely priced into the markets, the language in the accompanying statement was seen as the wild card, potentially setting the tone for the future pathway of policy. Removing the phrase “as appropriate,” the Committee seemed to signal a bias towards pausing after a third-round cut. Later, however, the Chairman reaffirmed policy makers’ data dependency and vowed to continue to act as appropriate despite the removal of that phrase from the October statement, reopening the door for potential further Fed action. Parsing through the Fed-speak, it appears the Fed would like to pause and is hopeful a stabilizing economy will allow it to do so. However, with a marked deterioration in the data, the Fed remains willing to reengage and provide additional support as needed.
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