Fed blackout period will lift with Waller’s CNBC appearance on Friday

By Howard Schneider

WASHINGTON (Reuters) -The Federal Reserve’s blackout period on public comment around meetings of the U.S. central bank lifts on Friday after a key interest rate decision earlier in the week, with Governor Chris Waller scheduled to appear on CNBC at 11:30 a.m. EDT (1530 GMT).

The Fed cut its overnight interest rate by half a percentage point on Wednesday, a larger decrease than some of its policymakers appeared to be leaning towards in the run-up to the two-day meeting.

Waller voted with the majority to support the half-percentage-point reduction in borrowing costs, which drew the first dissent from a member of the Fed’s Board of Governors since 2005. Fed Governor Michelle Bowman favored a smaller quarter-percentage-point rate cut.

The S&P 500 and the Dow Jones Industrial Average equities indices rallied to record highs following the Fed’s larger-than-expected cut and the prospect of easier monetary policy to come, even though officials’ economic projections released after the meeting led many analysts to infer the decision was closer than reflected by Bowman’s single dissent.

Yields on U.S. Treasuries, which have ticked higher since the Fed’s meeting triggered a risk-on wave across markets, were up modestly again on Friday.

Comments by Waller and other Fed officials in the coming days may clarify how the central bank’s rate-setting Federal Open Market Committee came to its decision.

Over three-quarters of economists in a Reuters poll see the Fed cutting its benchmark rate by another half of a percentage point this year to the 4.25%-4.50% range, with quarter-percentage-point reductions at the November and December meetings.

Investors in contracts tied to the Fed’s policy rate see a slightly more aggressive path, with an additional 25 basis points of easing by the end of 2024.

Either way, the central bank appears to be contemplating a faster exit from “restrictive” monetary policy to a more neutral setting, said David Mericle, chief U.S. economist at Goldman Sachs.

“The greater urgency suggested by … (the) 50-bp cut and the acceleration in the pace of cuts that most (policymakers) projected for 2025 makes a longer series of consecutive cuts the most likely path,” Mericle wrote in a research note.

“We … now expect a longer string of consecutive 25-bp cuts from November 2024 through June 2025, when the funds rate would reach our terminal rate forecast of 3.25%-3.50%.”