Does not raising rates at this meeting mean that the tightening cycle is over?
On October 8, Federal Reserve Governor Waller, in his remarks, separated two things: if the economy performs in line with his expectations, further rate hikes may still be needed; but the timing of when action is taken can be flexible, and it doesn’t necessarily mean consecutive hikes at every meeting.
The difference here is pace and direction. Choosing to observe at one meeting cannot, by itself, prove that no further action will be taken. Conversely, thinking that more rate hikes are still needed does not mean the next meeting is already confirmed to require a hike. Waller’s remarks reflect his personal view; ultimately, the decision still rests with the committee.
Market pricing of funds also has two layers. Short-term trading may hinge on whether the next meeting will act, while longer-horizon borrowing costs depend on the sequence of interest rate levels afterward. If you only focus on “it can wait,” and declare that liquidity will be broadly eased soon, you miss an important piece of evidence in between.
My main focus is whether the subsequent data has changed the assumptions that lead him to believe tightening is still necessary. If the assumptions haven’t changed—only adjusting the interval, versus fully changing the policy path—these are two different kinds of information.
Looking at $BTC , $ETH , and $SOL , interest-rate expectations affect funding costs and risk appetite, but they can’t alone explain the buy/sell strength of each asset. Breaking an official’s single sentence into conditions, timing, and the decision-maker is more useful than simply pasting a piece of “good news” or “bad news.”
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On October 8, Federal Reserve Governor Waller, in his remarks, separated two things: if the economy performs in line with his expectations, further rate hikes may still be needed; but the timing of when action is taken can be flexible, and it doesn’t necessarily mean consecutive hikes at every meeting.
The difference here is pace and direction. Choosing to observe at one meeting cannot, by itself, prove that no further action will be taken. Conversely, thinking that more rate hikes are still needed does not mean the next meeting is already confirmed to require a hike. Waller’s remarks reflect his personal view; ultimately, the decision still rests with the committee.
Market pricing of funds also has two layers. Short-term trading may hinge on whether the next meeting will act, while longer-horizon borrowing costs depend on the sequence of interest rate levels afterward. If you only focus on “it can wait,” and declare that liquidity will be broadly eased soon, you miss an important piece of evidence in between.
My main focus is whether the subsequent data has changed the assumptions that lead him to believe tightening is still necessary. If the assumptions haven’t changed—only adjusting the interval, versus fully changing the policy path—these are two different kinds of information.
Looking at $BTC , $ETH , and $SOL , interest-rate expectations affect funding costs and risk appetite, but they can’t alone explain the buy/sell strength of each asset. Breaking an official’s single sentence into conditions, timing, and the decision-maker is more useful than simply pasting a piece of “good news” or “bad news.”
Tap my avatar to view live trades with orders