Another pause as FOMC responds to trajectory of inflation

The penultimate FOMC meeting of 2023 was preceded by some dovish Fedspeak in October. For example:

  • Atlanta Fed President Raphael Bostic told the American Bankers Association, “I think our policy rate is in a sufficiently restrictive position to get inflation down to 2%,” suggesting, “I actually don’t think we need to increase rates any more.” 
  • Philadelphia Fed President Patrick Harker told members of the Delaware State Chamber of Commerce that, “Absent a stark turn in what I see in the data and hear from contacts ... I believe that we are at the point where we can hold rates where they are.”
  • Dallas Fed President Lorie Logan said, “If long-term interest rates remain elevated because of higher term premiums, there may be less need to raise the Fed funds rate.”

By the end of October, the market had come to a near-unanimous conclusion that the Committee would pause rate hikes for a second consecutive time on November 1, just as it did on September 20. Once again, the FOMC confirmed this consensus prediction, leaving the target at 5.25%-5.50%.

In our view, much of the November FOMC meeting was a confirmation of our research since the beginning of the year. Throughout 2023, Fundstrat Head of Research Tom Lee has argued that inflation is on a gli...
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