Welcome back to The Breakdown with me, NLW.

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What's going on, guys? It is Thursday, October 30th, and today we are talking about Fed Day. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, yesterday was Fed Day,

and while we got the rate cut we were expecting, there was a sense of uncertainty on where policy

goes next. During his opening remarks, Chairman Jerome Powell said, a further reduction in the policy

rate at the December meeting is not a foregone conclusion far from it. Now, heading into the meeting,

a rate cut was fully priced in for both, heading into the meeting, a rate cut was fully

priced in for both this month and December, with a January cut also more likely than not.

When Powell said those words, the odds of a cut in December dipped to just 66%, and January

dropped to just 25%. In other words, this was a big change in direction, significantly rattling

market expectations.

Powell was questioned about this statement as soon as questions from the press began.

Implying a lot of disagreement among the committee, Powell said,

we had strongly differing views today.

The takeaway is that we haven't made a decision about December, and we're going to be looking

at the data that we have.

Powell acknowledged that he always said the Fed is data dependent and doesn't make decisions in advance, but said, I'm saying something in addition here, that it's not to be seen as a foregone conclusion, in fact, far from it. It turned out that the disagreement on the FOMC was enough to drive two dissents, one from each end of the spectrum. On the diverse side, Governor Stephen Moran voted for a double cut instead. Moran was placed on the Fed board earlier this year and is seen as a proxy for Trump's views that the Fed should be cutting rapidly, so this isn't that much of a surprise. On the hawkish side, Kansas City Fed President Jeff Schmidt voted to hold rates steady, believing that it's already time for a pause.

Powell commented, for some part of the committee, it's time to maybe take a step back and see whether

there are really downside risks to the labor market, or see whether, in fact, the stronger

growth that we're seeing is real. Looking at the economic situation, Powell noted that risks

are still alive for both inflation and the labor market, commenting,

there is no risk-free path for policy. The view on inflation was that tariffs are still having an impact, but that the underlying level of inflation is only slightly above the 2% target.

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