Fedspeak Monitor 12/8/24

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A lot of Fedspeak this week, enough to firm up our view that there will be a cut in December, with a January pause. Most of the Fedspeak is fairly similar to before; Goolsbee is still a dove and Bowman still sees greater inflation risks, but there are some developments.

• For December's decision, Waller made the biggest splash, saying that he "lean[s] toward supporting a cut to the policy rate at our December meeting. But that decision will depend on whether data that we will receive before then surprises to the upside and alters my forecast for the path of inflation."
• Bostic's essay this week spent a lot of time reviewing some of the evidence that the labor market might be weakening faster than expected (for example, due to lower job creation from new establishments): "The salient question for me today is whether the labor market is cooling more dramatically than I had imagined when I developed my outlook for the economy."
• Musalem expressed a relatively high range of estimates of neutral, saying that "monetary policy rules suggest a federal funds rate between 4.3% and 5.4% for the fourth quarter of 2024."
• Hammack delivered some of her first substantive remarks, and they were hawkish: says the current market pricing—25 bp by January and a "few" cuts in 2025—is consistent with her baseline view.

We're seeing the hawks get more vocal about the idea that the neutral rate is higher and that it's time to start slowing. There's enough consensus for a December cut, but by January the Committee seems likely to hold.