00:00We are also hearing how Fed Chair Powell addressed the dissent at this meeting.
00:06It's a close call. We have to make decisions.
00:10And we always hope that the data will give us a clear read.
00:14But in this situation, you have competing.
00:18If you look through the SEP, you'll see that a very large number of participants agree
00:24that risks are to the upside for unemployment and to the upside for inflation.
00:30So what do you do? You've got one tool. You can't do two things at once.
00:35Let's bring in our Federal Reserve and Economy reporter, Ender Current.
00:39Also joining us is Kelvin Tay, Regional CIO at UBS Global Wealth Management.
00:45Great to have you both. Kelvin, let's start with you first.
00:48So when it comes to the initial reaction to the Federal Reserve,
00:52is that your assessment that it's less hawkish than anticipated?
00:56What is this going to mean for Mark?
00:57Yeah, I think he was a little less hawkish than expected.
01:00In fact, I would actually say that he was a little bit almost on the dovish side,
01:04especially his comments on the fact that he thinks that inflation is going to be a one-off
01:07and thereafter actually start to tail off.
01:09And if you look at the Federal Reserve's economic forecast as well,
01:12they've actually raised the forecast next year to 2.5%.
01:15And I think the reason for that is because they see productivity coming in to actually live growth
01:19and actually keep the cost actually quite under control.
01:22And they do think that inflation is likely to actually come off to about 2.5% to 2.4%,
01:27thereabouts, where CorePC is concerned.
01:29So I would say that overall it's actually a little bit less hawkish than what we were actually looking for.
01:35Ender, we did see, though, the change in language from the Fed's statement
01:38that potentially last time it really signaled that pause when it comes to those rate cuts.
01:43What's the key takeaway for you here?
01:46Well, I think, look, the cut was expected.
01:53Ender, go ahead.
01:54The cut was expected.
01:55The large growth upgrade, I think, was something of a standout in terms of their forecasts.
02:03But, of course, the other big takeaway was the level of disagreement now among the policymakers.
02:09You had three dissents on the decision itself today.
02:12That's the most since 2019.
02:15You clearly have a very divided outlook in the dot plot in terms of where interest rates in the US might be going over the next year and year after that.
02:24And, of course, then in the finer detail, there's another short-term rate where the regional Fed presidents were showing their displeasure at bringing down that rate also.
02:33So when you take it all together, it's clearly a divided policy committee and signalling that next year, when they do move into next year,
02:41and they do move into getting that new Fed chair from May of next year onwards,
02:45it's probably going to be very hard to get consensus in terms of where things are standing right now, at least.
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