On the October FOMC: Powell to Miran -- "Take a Step Back"

Double-easing and a double-dissent. The funds rate target is lowered to 3-7/8%, and so-called "quantitative tightening" is over. Miran and Schmid dissent, the former dovish and the latter hawkish. Powell sounded hawkish in the presser, dressing down Miran and Waller, suggesting they "take a step back." This was likely an attempt to shape market expectations about the certainty of a December cut, and for that matter an implied funds rate curve that has Miran's crazy-low "dot" for 2026 not so unlikely. Markets are discounting some combination of a recession and Trump packing the Board with like-minded doves. We think recession is highly unlikely, and can't guess how quickly Trump can get his doves in place. We don't disagree with Powell that the Fed is very close to neutral now, and that is confirmed by literally every canonical monetary policy "rule."