Two Federal Reserve officials argued this week that more data needs to be assessed before deciding the next move in monetary policy, leading markets to scale back expectations of a rate hike at the next Federal Open Market Committee meeting in October. New York Fed President Williams said on the 29th that one more rate hike before year-end could be appropriate, but noted that the Fed has time to assess economic indicators before determining the timing of the next increase, saying, "The Fed decided on policy measures at the September FOMC meeting, so there is no need to act hastily now." Fed Vice Chair Jefferson also said on the 1st, in a speech at the University of Virginia's Darden School of Business, that while he supports the rate hike decided at the September meeting, he sees no need to rush further increases, stating, "We need to carefully assess the direction of economic indicators, changes in the outlook, and the balance of risks before deciding on future policy adjustments." Following Williams's remarks, market expectations that the Fed would proceed with an additional rate hike at the October 27-28 FOMC receded, and Jefferson's comments helped solidify that shift in sentiment. Major global securities firms now expect the Fed to raise rates only once more this year, in December rather than October.
Two Fed officials dismissed an October rate hike, pushing market expectations for further tightening to December, so the expected policy rate path declines.
Reduced odds of an October Fed rate hike lower expected short-term rates, pulling the 10-year Treasury yield down.
