The Fed tried but...

The noteworthy fact of the November 1^st FOMC meeting was the Fed basically saying (with comments in speeches prior on this) that the market had tightened for them with the sharp rise in long rates and thus gave them license to pause. Well, with the notable easing of financial conditions since and into the December 13^th meeting, stoked in part by the Fed itself, they said in the minutes from that meeting that “Many participants remarked that an easing in financial conditions beyond what is appropriate could make it more difficult for the Committee to reach its inflation goal.”

The minutes also said that while their “baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024”, the “participants also noted, however, that their outlooks were associated with an unusually elevated degree of uncertainty and that it was possible that the economy could evolve in a manner that would make further increases in the target range appropriate.” Meant to keep us on our toes in terms of balancing the markets desire for a lot of rate cuts and the Fed’s interest right now in just a few.

Also, implicitly hammering home the message that while rates might get cut this year, the fed funds futures market is not in sync with their thinking, they said further “Several also observed that circumstances might warrant keeping the target range at its current value for longer than they currently anticipated.” ‘Several’ ain’t ‘few.’