Federal Reserve Chair Jerome Powell poured cold water on hopes for a holiday rate cut, dialing back expectations as the labor market cools and inflation persists.
Powell said a December cut is far from guaranteed. Even as the central bank on Oct. 29 trimmed its benchmark federal funds rate to a range of 3.75% to 4%, anyone looking for certainty had to look elsewhere. An ongoing government shutdown means the Fed is missing key data, inflation remains stubbornly high and the labor market shows signs of cooling – all signs pointing to a murky road forward for Fed officials.
"What do you do if you're driving the fog? You slow down," Powell said regarding the lack of government data.
Powell’s description of strong disagreements among voting members about how to proceed in December further drove the point home.
“When we have tension between our two goals, we have strong views across the committee,” Powell said after the Fed's two-day October meeting. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”
