Fed's Powell: Tension between two goals, and strong views across committee

POWELL: ANOTHER CUT IN DECEMBER IS FAR FROM ASSURED Fed's Powell: Strongly differing views at meeting about how to proceed. FED’S POWELL: IN DECEMBER, FED WILL ENTER THE NEXT BALANCE SHEET PHASE AND HOLD STEADY FOR A PERIOD FED’S POWELL: REINVESTMENT STRATEGY WILL ALIGN WEIGHTED AVERAGE MATURITY MORE CLOSELY WITH THE STOCK OF OUTSTANDING SECURITIES FED’S POWELL: NO DECISION MADE YET ON DECEMBER MEETING; FURTHER RATE REDUCTION IS NOT A FOREGONE CONCLUSION, WITH STRONG VIEWS AND TENSION BETWEEN POLICY GOALS ACROSS THE COMMITTEE

*POWELL: NEAR-TERM INFLATION EXPECTATIONS HAVE MOVED UP *POWELL: MOST LONGER-TERM EXPECTATIONS CONSISTENT WITH 2% GOAL *POWELL: HIGHER TARIFFS ARE PUSHING UP PRICES FOR SOME GOODS *POWELL: REASONABLE BASE CASE IS SHORT-LIVED TARIFF INFLATION *POWELL: IN NEAR TERM, INFLATION RISKS ARE TILTED TO UPSIDE POWELL: RISK OF MORE PERSISTENT INFLATION NEEDS TO BE MANAGED *POWELL: THERE IS NO RISK-FREE PATH FOR POLICY FED’S POWELL: MUST TAKE A BALANCED APPROACH AS THE BALANCE OF RISKS HAS SHIFTED, AND WE REMAIN WELL POSITIONED

Fed's Powell: If we see data labour market is stabilizing, or strengthening, it would play into policy decisions. Fed's Powell: Not seeing an uptick in claims, or a downtick in openings, suggests gradual cooling, gives some comfort. FED’S POWELL: IF THERE WERE A SIGNIFICANT CHANGE IN THE ECONOMY, WE WOULD LIKELY DETECT IT Fed's Powell: If there is a high level of uncertainty, that could be an argument for caution on moving. Fed's Powell: For today's rate cut, a strong, solid vote, and the strongly differing views were really about the future.

*POWELL: DON'T KNOW WHAT DATA WE'LL GET BEFORE DECEMBER FOMC *POWELL: STRONGLY DIFFERING VIEWS WERE REALLY ABOUT THE FUTURE *POWELL: LABOR MARKET IS NOT CLEARLY DECLINING QUICKLY *POWELL: RESERVE DECLINE WILL HAPPEN, BUT NOT FOR LONG TIME *POWELL: FED WILL BE ADDING RESERVES AGAIN AT A CERTAIN POINT FED’S POWELL: FED PORTFOLIO CURRENTLY HAS MORE DURATION THAN OUTSTANDING TREASURY STOCK; AIMS TO SHIFT BALANCE SHEET TOWARD SHORTER-DURATION ASSETS, WITH ENDPOINT YET TO BE DECIDED *POWELL: SEPTEMBER CPI WAS A LITTLE SOFTER THAN EXPECTED *POWELL: NON-HOUSING SERVICES INFLATION HAS BEEN MOVING SIDEWAYS

FED’S POWELL: DOESN’T PLACE MUCH WEIGHT ON NON-MARKET SERVICES DATA; NOTES INFLATION EXCLUDING TARIFF EFFECTS IS NOT FAR FROM THE 2% TARGET FED’S POWELL: ESTIMATES INFLATION MAY BE ABOUT 0.5 TO 0.6 PERCENTAGE POINTS ABOVE TARGET; DOES NOT SEE LABOR MARKET OR INFLATION EXPECTATIONS TIGHTENING IN A WAY THAT WOULD MAKE INFLATION MORE PERSISTENT FED’S POWELL: NOT ASSUMING TARIFF-DRIVEN INFLATION WILL BE ONE-TIME; SAYS FED IS MONITORING DEVELOPMENTS CLOSELY FED’S POWELL: POLICY STANCE IS MODESTLY RESTRICTIVE, WHICH IS CONTRIBUTING TO THE LABOR MARKET’S GRADUAL COOLING POWELL: DATA CENTER INVESTMENTS AND AI IS A BIG DEAL