Fedspeak recap: Odds of a January or March rate cut dwindle

Today, there was a barrage of Fedspeak, yet the clarity of the Fed's policy direction remains elusive. The market estimates only a 9% chance of a rate cut at the January 28 meeting, 26% for March, and 60% for April. Neel Kashkari emphasized that it is 'way too soon' to cut rates, advocating for maintaining interest rates this month. He acknowledged a confusing economy that is overall resilient while expressing caution about premature cuts despite declining inflation. Raphael Bostic supported Kashkari's stance, warning that the inflation challenge 'has not been won yet', though he expects the economy to strengthen into 2026, insisting that current policy needs to remain restrictive. Conversely, Paulson and Miran expressed a softer tone, describing the economic outlook as 'pretty benign' and indicating potential further cuts later this year contingent on forecasts. Miran argued deregulation could create downward price pressure, providing justification for rate cuts. These conflicting views underline the uncertainty surrounding future monetary policy.