FED: NY's Williams Signals Little "Urgency" For January Cut After Messy Data
Dec-19 14:00
NY Fed President Williams tells CNBC in an interview Friday that the this week's soft CPI print as well as the tickup in the unemployment rate were distorted by technical factors. As such he says that the latest data don't change his view of the outlook: “I don’t personally have a sense of urgency to need to act further on monetary policy right now because I think the cuts we’ve made have positioned us really well."
- We would interpret the lack of "sense of urgency" to "act further...right now" as Williams pushing back against prospects of an end-January FOMC rate cut, at least unless there is some significantly dovish development in the data between now and then.
- He says that "technical factors" associated with the BLS's post-shutdown estimates may have pushed down CPI by around 0.1pp (unclear whether he's referring to the 2.74% Y/Y November headline CPI reading or the 0.2% 2-month rise), with the unemployment rate unduly boosted by 0.1pp (came in at 4.56% in November, so implying it would have been largely unchanged from the 4.44% printed in September).
- So as Chair Powell warned at the December meeting, Williams (and likely the rest of the FOMC) will require more data to get a more accurate read on the current state of the dual mandate variables before making a decision to ease further.
- On the well-known technical issues with Thursday's messy CPI report, Williams told CNBC “There were some special factors of practical factors that really are related to the fact that they weren’t able to collect date in October and not in the first half of November. And because of that, I think the data were distorted in some of the categories, and that pushed down the CPI reading, probably by a tenth or so...it’s hard to know, we’ll get some when we’ll get to December date, I think we’ll get a better reading of how much that distortion, how big the effect was, but I do think that that was pushed down a bit by these technical factors."
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