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Fed Cuts Rates By 25bps As Expected, Removes 'Dovish' Inflation Language

Tyler Durden's Photo
by Tyler Durden
Thursday, Nov 07, 2024 - 07:00 PM

It's been an 'eventful' six weeks since The Fed decided (on Sept 18th) to slash interest rates by 50bps.

The macro-economic data has literally exploded stronger...

Source: Bloomberg

...with inflation reigniting and growth surprises soaring...

Source: Bloomberg

...and that has slammed rate-cut expectations down by over 100bps...

Source: Bloomberg

Which has helped lift gold and stocks while crude prices have collapsed (and Bitcoin has gone vertical)...

Source: Bloomberg

But, more problematically, the mortgage rate has ripped higher since The Fed cut...

Source: Bloomberg

The market is fully priced for 25bps cut today, but December is now a coin-toss (54% odds of another 25bps).

Will The FOMC (and Powell's presser) jawbone expectations down further? Will Bowman dissent again?

So what did The Fed do?

  • *FED LOWERS BENCHMARK RATE 25 BPS TO 4.5%-4.75% RANGE

  • *FED SAYS RISKS TO GOALS REMAIN 'ROUGHLY IN BALANCE'

  • *FED: LABOR MARKET CONDITIONS HAVE 'GENERALLY EASED'

No dissent on this rate-cut decision.

Key changes:

  • Most notably, removing language that Fed has "gained greater confidence that inflation is moving sustainable toward 2 percent".

  • Adding that labor market conditions have "generally eased" since earlier in the year, replacing "job gains have slowed".

Read the full redline below:

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