ResearchDeutsche BankAmy Yang | (+1) 212 250 9959 | amy.yang@db.comJanuary 16, 2024Fed Watcher: Pushing back on pricing of cuts, mixed messaging on QTDeutsche BankResearchAmy YangEconomist(+1) 212 250 9959 | amy.yang@db.comMatthew LuzzettiChief US Economist(+1) 212 250 6161 | matthew.luzzetti@db.comBrett RyanSenior Economist(+1) 212 250 6294 | brett.ryan@db.comJustin WeidnerEconomist(+1) 212 469 1679 | justin-s.weidner@db.com Avik ChattopadhyayResearch Associateavik-a.chattopadhyay@db.comJanuary 16, 2024IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. MCI (P) 041/10/2023. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Distributed on: 16/01/2024 21:51:09 GMT7T2se3r0Ot6kwoPaResearchDeutsche BankAmy Yang | (+1) 212 250 9959 | amy.yang@db.comJanuary 16, 2024DB Fed Watcher: Pushing back on pricing of cuts, mixed messaging on QT2FedspeakWho**TakeawaysBias*Waller [4](01/16)▪ More confident that we are closer to the goal, but need more info over the “coming months” confirming inflation down to 2%▪ If inflation doesn’t rebound or stay elevated, can cut this year, view consistent with Dec SEP median dot▪ Once rate cuts begin, be “methodical and careful”▪ No need to move as quickly, cut as rapidly as in the past▪ Watch scheduled CPI revisions▪ Aware of overtightening risks▪ B/S runoff no concern so far, can consider slowing QT this year▪ Fin. Conditions still restrictive▪ Rather err on the side of waiting too long (to cut) than going too soon▪ Stronger eco. activity, worse labor market balance, stalling progress on disinflation could delay or dampen expectation for rate cuts this year▪ 10-11% of GDP as an approximate est. for equilibrium reserve levelBowman [5] (01/08)▪ Views evolved. Rates now sufficiently restrictive▪ Not yet for rate cuts, but eventually warranted as disinflation continued▪ Easing financial conditions could fuel inflation, upside risks remainFedspeak, continued Who**TakeawaysBias*Williams [2] (01/10)▪ Not close to slowing QT, but will discuss in ‘24▪ Maintain restrictive stance ‘for some time’, policy in good place▪ Far less concerned about inflation stuck too high, still far from 2%, more work to do▪ GDP ~@1.25% in 2024; UR @4%; inflation to 2.25% in ‘24 & 2% in ’25Mester [4](01/11)▪ Not there yet to cut rates, wants more evidence/progress, especially on housing, goods services▪ QT slowdown not imminent, Fed to discuss this year▪ March is probably too early for a cut▪ More disinflation will lead to rate cuts discussion, inflation progress should not stall out, continues to fall in 2024▪ Cannot reach 2% in ‘24, more work to do. Policy in good place▪ Balancing both sides of mandate is in focus this yearBostic [2](01/08)▪ Labor market much more balanced; dual mandates not yet in conflict▪ Current B/S runoff pac...
