FOMC Knife-Edge: Fed Rate Decision Simulator

Christopher Waller

THE KNIFE-EDGE PIVOT

Reuters reporting: Waller leans toward keeping rates steady, putting the September decision on a knife edge before the midterms. Toggle his stance below to observe the immediate tipping point.

Dual Mandate Dials FOMC Reaction Function

Core PCE Inflation (YoY) 2.7%

Monthly Non-Farm Payrolls +125k

Days to Midterm Election 48 days

Preset Scenarios

Committee Stance

7 - 5 HOLD CONSENSUS HOLD 5.25-5.50%

Market Implied Odds

51.4% Hold / 48.6% Cut

Majority Threshold

7 of 12 Needed

12-Member FOMC Voting Matrix (September Ballot) Click any voter to flip their individual stance

Financial Transmission Spreads

2-Year Treasury Yield

4.38%

+4 bps on Hold shift

DXY Dollar Index

103.85

Firming on rate plateau

S&P 500 Immediate Reaction

-0.42%

Discounting rate delay

Draft FOMC Implementation Note: "In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments, the Committee will carefully assess incoming data and the evolving balance of risks."

Voting against the action were: Jerome Powell, John Williams, Michael Barr, Philip Jefferson, Adriana Kugler, Lisa Cook, and Mary Daly, who preferred a 25 basis point reduction.