An out-of-the-spotlight FOMC meeting

It doesn’t happen often that a FOMC meeting is an afterthought, but last week’s was. Federal Reserve Chair Powell’s press conference garnered the most attention, being the follow-on from Trump’s win in the presidential election. 

The meeting was on the back burner in large part due to fulfilling of the widely expected vote to cut the federal funds rate by 0.25%, to a range of 4.5-4.75%. The FOMC statement said economic activity continues to expand at a solid pace. Yet, one of the only changes was that labor market conditions have generally eased, while inflation has made progress. That’s a slight downgrade from the “further” progress the Fed cited in its September statement. Powell balked at providing forward guidance for the Fed’s actions, saying it needs additional economic data. He said risks to the economy are more balanced, though expressed concern about geopolitics.

Powell also reminded the press he does not comment on fiscal policy. But here, that reiteration held additional meaning in light of potential actions by the incoming administration. Later, as if predicting tension with the new administration, Powell said he would not resign if asked. 

In reports released last week, weekly jobless claims remained low, and measures of the strength of the service economy improved. But unit-labor costs unexpectedly rose, a potential problem for inflation and the Fed’s plans for easing policy. Consumer confidence, as measured by the University of Michigan consumer sentiment survey, rose in early November. Respondent expectations were also high, due to strengthening income prospects, and short-run business conditions soared. The economy is in a good position as 2024 nears its end.