Federal Reserve Board FOMC Meeting in January 2024: Our Notes

By Jeffrey Cohen
President, US Advanced Computing Infrastructure, Inc.

Q: What do you need to see to cut rates?
A: More good data.
We are confident that inflation is coming down. More good data.


Q: Nick Timeros, WSJ, what does 6 weeks or 3 months buy you? Why wait?
A: Growth strong. And labor market strong.
Really confident that inflation is at or below 2%.
Median participant wrote down 3 rate cuts this year. We need some confirmation, sustainably to 2%.
Gaining confidence.
Sliding employment would also allow for cuts in interest rates. Cutting sooner if there was weakness in labor market conditions.

Q: What about if we see stronger economic growth?
A: Solid economic growth is welcome, desired, and as long as this is here, we don’t need to cut.

Nobody (the voting members of the FOMC) wanted to cut rates.
They were not considering a rate cut.


Q: Are you looking at economic data like OpenTable reservations or indicators of activity? Which ones?
A: It’s not the pandemic. People are working and are earning wages, so we can look at traditional data. We don’t need ‘innovative’ data.


Q: Are interest rates restricting the economy?
A: Supply side is growing quickly. More activity is driven by labor market healing and supply chain healing. When this peters out, you will see more restriction. In other words, we are not seeing interest rates being very restrictive.


Overall, we are in a good position. The economy is doing ok.

March is not the base case for cuts.


My Thoughts at that time:
Equity market is down at 3pm ET, maybe not such a good meeting.


Q: What about balance sheet run-off? Changes to the balance sheet of the Fed?
A: March meeting, that's the balance sheet meeting. They will look at that independent tool of runoff. Should they? It could happen that rates decline, but runoff stays or vice versa.


Q: If not in March, when would we know? How many months?
A: We have growing confidence on inflation. It is a very important decision to start cutting rates, it is consequential, and they want to get the job done right.


Q: Change gears. Your name comes up, and what about a third term as Fed Chair? 
A: I am focused on doing my job, and this year is a very consequential year.
Buckled down to do our jobs.