Fed Blackout Period Ends with Waller’s CNBC Appearance on Friday

By Howard Schneider

WASHINGTON – The Federal Reserve’s period of silence regarding public comments surrounding its meetings will conclude on Friday after a significant interest rate decision made earlier this week. Governor Chris Waller is set to appear on CNBC at 11:30 a.m. EDT.

On Wednesday, the Fed reduced its overnight interest rate by half a percentage point, which exceeded the expectations of some policymakers prior to the two-day meeting.

Waller supported the majority decision for the half-percentage-point reduction, marking the first dissent from a member of the Fed’s Board of Governors since 2005. Fed Governor Michelle Bowman advocated for a smaller quarter-percentage-point cut.

U.S. equity markets surged to record highs following the Fed’s unexpected rate cut and the anticipated easing of monetary policy, despite economic projections released after the meeting suggesting a more nuanced decision-making process, indicated by Bowman’s dissent.

Yields on U.S. Treasuries, which have increased since the Fed’s meeting ignited a risk-on sentiment across the markets, edged up again on Friday.

In the days ahead, comments from Waller and other Fed officials may provide insights into the rationale behind the central bank’s decision made by the Federal Open Market Committee.

A recent Reuters poll indicated that over three-quarters of economists expect the Fed to implement another half-percentage-point cut this year, bringing the benchmark rate within the 4.25%-4.50% range, with additional quarter-percentage-point reductions anticipated at the November and December meetings.

Investors in Fed policy rate contracts predict a slightly more aggressive easing trajectory, expecting an additional 25 basis points of reduction by the end of 2024.

Regardless, the central bank seems to be considering a quicker shift from a "restrictive" monetary policy to a more neutral stance, according to David Mericle, chief U.S. economist at Goldman Sachs.

Mericle noted that the urgency implied by the 50-basis-point cut and the anticipated acceleration in cuts projected by most policymakers for 2025 makes a sequence of consecutive cuts highly likely. He now forecasts a series of successive 25-basis-point cuts from November 2024 through June 2025, at which point the funds rate might reach a terminal forecast of 3.25%-3.50%.