Timing the Fed rate cut, unhelpful edition: ‘it is what it is’

When will the Federal Open Market Committee (FOMC) rate cut come?

September? December? Its like Numberwang but with months.

A note from U.S. economist at Jefferies after Wednesday’s CPI/Fedfest summed up trying to sift through Fed ‘guidance’:

• “Powell … wouldn’t be specific about a number of months of good data, or about specific changes in the labor market data that would start to worry them”
• “Essentially, the guidance boiled down to ‘we’ll know it when we see it’, or to use a direct quote from today’s press conference, ‘it is what it is.'”

The conclusion is policy remains data dependent:

• “The data is exceedingly difficult to forecast at the moment, and the Fed lacks confidence to project a path forward for rates,”
• “The lack of specific guidance is frustrating, but also quite understandable.”

• US May CPI 3.3% y/y versus 3.4% expected

This article was written by Eamonn Sheridan at www.forexlive.com.