Economists and investors who are trying to get a fix on what the Federal Reserve may do in the months ahead have zeroed in on a single phrase in the statement it has issued after its most recent policy meetings.
The key issue at this week’s meeting will be whether the Fed has taken out enough insurance. Powell and other Fed officials credit their rate cuts with lowering mortgage rates, lifting home sales and generally keeping the economy on track. Economists at Goldman Sachs have said they think the phrase will be erased from the Fed’s statement Wednesday to suggest that officials are prepared to suspend their rate cuts at least until the economy shows unmistakable signs of weakness.
Bostjancic also noted that the financial markets aren’t pricing in a cut in December. As a result, there is little need for Fed officials to steer investors in a different direction. “I suspect we won’t know much about what they’ll do in December,” he said. “They’re going to be very balanced in their communication.”