Since NY Fed President Williams speech on November 21st markets prepared for a “hawkish cut” today i.e. cutting rates while suggesting that the bar for further easing had been raised. One could argue that was delivered in the prepared materials released at 2:00. However, there was a dovish surprise related to “reserve management”. In the statement the description of economic growth and inflation remained the same. The labor market language was downgraded slightly by acknowledging the recent uptick in the unemployment rate. “The extent and timing of” additional adjustments was added to the forward guidance which is the same language used last year when the Fed paused the easing cycle. Earlier we suggested the number of dissents would be a good litmus test for Chair Powell’s cat herding abilities with only one additional dissent from last meeting, Austan Goolsbee preferring no cut, I’d say he’s pretty good. However, the disparate views are more evident in the Summary of Economic Projections.

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