Powell Throws a Wrench Into a December Rate Cut
The Fed chair’s decision to push back on expectations was meaningful.
Is he losing his grip on the FOMC?
Photographer: Michael Nagle/Bloomberg
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The Federal Reserve announced a 25-basis-point cut Wednesday, as did the Bank of Canada. The Fed also revealed that it would stop “quantitative tightening” (selling bonds from its portfolio in a maneuver that will tend to tighten financial conditions) as of the end of next month. These are significant developments, which had been widely expected.
The surprise north of the border came when the BOC offered forward guidance that suggests it will soon be done with cutting, with its president, Tiff Macklem, saying rates were “at about the right level to keep inflation close to 2%.” The bigger surprise south of it came when Fed Chair Jerome Powell chose to say that another cut in December is “not a foregone conclusion.” He even added: “Far from it.”