With Nick Timiraos & Colby Smith—& Tim Duy—now in charge of how I interpret Fed messaging.… The Federal Reserve initiated its 2024 monetary-policy easing cycle with a 50-basis-point rate cut, a decision hailed as the committee consensus coalescing around the view of Chair Jerome Powell. But, Eeyore-like, Mohamed El-Erian points to the ongoing narrative swings as signs of serious flaws in communications doctrine at the Fed…ShareShare Brad DeLong’s Grasping RealityLast Monday September 16 the very sharp Tim Duy nailed it as to what the Federal Reserve was going to do today, September 28:Tim Duy: Fed Watch, 9/16/2024: ‘The Fed will most likely kick off this easing cycle with a 50bp cut this week…. With the July employment report. At that time, we switched our call to a 50bp rate cut in September with the guidance that even if the Fed opted for 25bp, it would hike rates 50bp at least once before the end of the year…. The data since then only bolstered the case to lead with [0.]50[%-points]…. [But] here is absolutely no question that speakers steadfastly denied that the labor market had “deteriorated,” the new standard to justify a [0.]50[%-points]… cut…. Governor Chris Waller, who had three hours with the August employment report…. His guidance describes leading with a [0.]25[%-points]… cut and escalating to [0.]50[%-points]… if necessary…. By last Thursday [September 12], market pricing had decayed to just -[0.]28.5[%-points]… for the September meeting…. The stage was set for the Fed to cut 25[%-points]…. That afternoon, however, Wall Street Journal reporter Nick Timiraos released an article…. Financial Times reporter Colby Smith followed up… and markets perceived that as confirmation that the Fed had engaged in covert communications during the blackout…. The central guidance… was suddenly downplayed in the press. Fed speakers clearly guided markets to [0.]25[%-points], but the press overall now describes this meeting as a close call between [0.]25[%-points] and [0.]50[%-points]. It very much was not a close call on the [previous] Friday [September 6 when Waller spoke]… <http://sghmacro.com> Refer a friendNailed it.To the wall:Enda Curran: Fed’s Half-Point Rate Cut Is a Victory for Powell: ‘That the Fed thinks it’s brought inflation under control without having blown up the labor market and can now lower borrowing costs is a significant moment in US economic history. “This was a huge victory for Jay Powell,” KPMG Chief Economist Diane Swonk told Bloomberg Television, making the point that the Fed chair succeeded in getting fellow policymakers to agree to a 50-basis-point move…. Projections released by the Fed show a narrow majority, 10 of 19 officials, favors lowering rates by at least an additional half-point over its two remaining 2024 meetings… <https://www.bloomberg.com/news/newsletters/2024-09-18/fed-s-half-point-rate-cut-is-victory-for-chair-jerome-powell?cmpid=BBD091824_businessweek>Give a gift subscriptionNick Timiraos and Colby Smith are now 100% in charge of my understanding of what forward guidance the Federal Reserve is trying to provide about its monetary policy.