In remarks on Wednesday, Fed Chair Jerome Powell came across as “slightly hawkish,” according to Krishna Guha, vice chairman at Evercore ISI. However, his tone wasn’t assertive enough to derail the expectation of a rate cut in December.
Powell mentioned that both economic growth and inflation have been somewhat stronger than the Federal Reserve anticipated. As a result, the Fed might lean towards a more cautious stance moving forward.
Guha noted that this approach is “certainly more hawkish” compared to Fed Governor Chris Waller’s comments earlier in the week, where he indicated a preference for another rate cut in December.
Powell’s language hints at a slower pace for future rate cuts, suggesting they might occur once every other meeting, according to Guha.
Nonetheless, the Fed Chair could decide to bypass the December cut altogether, Guha added, especially if inflation rates continue to rise for a third consecutive month.
