Sometimes being Fed Chair is a trying job. During the last post-FOMC press conference, Powell was given numerous opportunities to interpret the data in a hawkish fashion. Instead, he took a dovish tone.
As one of many examples, Jenna Smialek of the New York Times asked if strengthening in the labour market would be a reason to hold off on rate cuts. Powell’s response was, “No, not all by itself no.”
Even as Powell sounded a dovish tone, and markets took a risk-on tone as a relief that the median dot plot is still forecasting three rate cuts for 2024, not all is dovish within the FOMC. An analysis of how the 2024 dot plot evolved between December and March shows a mildly hawkish tone. Even though the median stayed at three cuts, the average fell and the distribution became far less dovish than the December projections.
The opinion of individual members of the FOMC has become more hawkish. If Powell needs to achieve a consensus for a rate cutting decision, it was be as difficult as herding cats.
The full post can be found here.
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