Episode summary
Fed still on track for December hike? Here's what to know
Summary
The Fed held its benchmark rate steady at 3.75% to 4%, but Steve Liesman said the meeting still pointed many Fed watchers toward another hike in December if the data cooperates. He said the chair described the economy as strong but not hot, financial conditions as tighter but not tight, and emphasized that the central bank still sees it as its responsibility to bring inflation back to 2%.
The discussion centered on how much signal the statement and press conference really sent. Liesman noted that some analysts thought the chair left the market without a fully coherent explanation for skipping an October hike, while futures still priced an 85% chance of a December move and a 66% chance of another hike in March. He also highlighted two dissents, including Lisa Cook and Beth Hammack, which suggested some disagreement inside the Fed.
The panel also focused on inflation risks from oil and shipping disruptions, with worries that supply shocks could keep feeding price pressure even if energy flows normalize. Liesman argued that there may already be inflation in the pipeline, including in PPI components and other upstream goods, making the Fed’s next decision more complicated than a simple pause-and-wait approach.
Key takeaways
- Steve Liesman said the Fed held rates at 3.75% to 4% but still signaled a likely December hike if incoming data supports it.
- Market pricing after the meeting still implied an 85% chance of a December rate increase and a 66% chance of a hike in March.
- The meeting produced two dissents, including Lisa Cook and Beth Hammack, underscoring internal debate over the Fed’s path.
- Analysts criticized the chair for not clearly explaining why the Fed skipped an October hike.
- The discussion flagged oil, shipping, and upstream goods prices as possible sources of renewed inflation pressure.
Notable quotes
“THE FED HOLDING STEADY. AS EXPECTED THE RANGE OF 3.75 TO 4%”
“MOST STILL CAME TO A CONCLUSION THAT HE SIGNALED ANOTHER RATE HIKE WAS ON THE WAY IN DECEMBER, IF SUPPORTED BY THE DATA”
“THE MARKET HAS BECOME A LITTLE LESS CONVINCED THERE IS A PLAN TO TIGHTEN IN DECEMBER”
“THAT'S WHAT THE MARKET HEARD. AND THAT'S WHAT THAT'S HOW THEY'RE PRICED”
“I STILL AM NOT CONVINCED THAT WE'RE, I DON'T LIKE THE, THE BLUNT FORCE INSTRUMENTS”
How the episode opens
With a lifetime warranty on premium arches. Our smiles are built for life. — We're coming off of a fed meeting with an expected outcome, but a few surprises as senior economics reporter Steve Liesman was there. Just got back and you've got all the details. I'm so curious what you thought.
Good morning andrew. Yeah. The fed holding steady.
As expected the range of 3.75 to 4%. Fed watchers continue to complain about the lack of clarity from the new fed chairman, but most still came to a conclusion that he signaled another rate hike was on the way in december, if supported by the data. Here's the quote in explaining his decision to pause after recent hot inflation reports, the fed said the accumulation of more information will help the committee determine the policy stance appropriate to ensure a timely return to the inflation of inflation to the committee's 2% goal.
At his press conference, fed chairman moore said the economy was strong but not hot. Financial conditions were tighter but not tight, with recent fed tightening already showing up in financial markets. And then he reiterated it's the fed's responsibility to get inflation down.
Taken together with the fed's september forecast most concluded on balance, the fed will tighten in december. But worse did come in for some criticism. Greg darko from ey parthenon writing chair warsh fell short by failing to provide a coherent argument for not raising rates in october.
Mike feroli from jp morgan, writing without a clear answer for not hiking, it is understandable that the market has become a little less convinced there is a plan to tighten in december. Well, what did the futures do? They show an 85% chance of a december hike, followed by a 66% chance of a hike in march.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed decision
- interest rates outlook
- inflation fight
- december rate hike
- october rates hold
Watch the episode
Watch “Fed still on track for December hike? Here's what to know” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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