Highlights of the Federal Reserve interest rate decision on October 30, 2019:

  • Rates lowered to range of 1.50%-1.75%
  • Markets priced in a 97% chance of a cut before the decision
  • Prior range was 1.75%-2.00%
  • George and Rosengren wanted no change, they were the only dissenters
  • Uncertainties remain, will assess appropriate rate path
  • Change of wording in the statement says it will monitor incoming info "as it assesses the appropriate path" for the target range
  • Sets IOER at 1.55%, as expected
  • Economic activity has been rising at a moderate rate, the same as prior
  • Repeats that job gains have been solid, on average, in recent months, and the unemployment rate has remained low
  • Household spending has been rising at a strong pace vs 'appears to have picked up'
  • indicators of business fixed investment remains weak vs 'business fixed investment has been soft' prior
  • Repeats that core and headline inflation running below 2%
  • Says that market-based measures of inflation remain low vs 'have declined'
  • Says 'uncertainties about this outlook remain' vs 'uncertainties about the outlook have increased'

Key line:

The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.

vs prior:

the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

It all comes down to how you read this change. Clearly, the Fed wanted to change it so they didn't risk it being interpreted that another cut was coming. But they also didn't want to take a cut off the table if it's needed.

The market is reading that as hawkish. That's probably the right call. There is about a 27% chance of a Dec cut priced in and that will have to go to zero unless there is a surprise in the economic data or trade policy. However the moves have been small.

The economic assessments were virtually unchanged.