One thing is for certain following the Federal Reserve’s latest interest rate decision: September could be one for the books. “We have made no decisions about September. We don’t do that in advance,” Chair Jerome Powell told a reporter during the question-and-answer portion of his post-meeting conference. “We’ll be taking that information into consideration and all the other information we get as we make our decision.” That comment poured cold water on U.S. markets, with stocks falling from their session highs to end the day lower. The Fed held interest rates steady at the conclusion of its July meeting. This is despite opposition from President Donald Trump as well as dissent from multiple policymaking committee members. Michelle Bowman and Christopher Waller were the two governors who pushed for a 0.25 percentage point rate cut — marking the first time since 1993 the Fed has seen major a major disagreement on rate policy. Powell, however, had no interest in assuring investors a cut could be coming anytime soon. The central bank made no concession in its latest meeting statement that it will take a more dovish stance on inflation. He also reiterated a data-dependent approach that heightens the importance of economic releases over the next two months. Friday’s jobs report and the Fed’s Jackson Hole symposium on Aug. 21-23 will be in focus. Fed officials weren’t the only ones in disagreement about what will happen in September. Fed funds futures are pricing in a 50.4% likelihood of a quarter-point cut, according to the CME FedWatch tool. Brandywine Global portfolio manager Jack McIntyre and Dan Siluk, head of global short duration and liquidity at Janus Henderson Investors, are in the September rate-cutting camp: McIntyre: “Barring any major surprises with the July or August employment reports, the Fed will cut policy rates in September.” Siluk: “Markets are likely to interpret today’s outcome as a continuation of the Fed’s ‘wait-and-see’ strategy, with a dovish lean emerging through the dissents and softer language. The September meeting will be a live one.” Lon Erickson, portfolio manager at Thornburg Investment Management, is taking the other side. “Inflation could still be coming, and the Fed already lost a rate gamble in this cycle,” he wrote. “And in his final months, Powell certainly doesn’t want ‘fooled twice’ to be his legacy.” Either way, Brandywine’s McIntyre is sure of one thing: “That meeting will have fireworks; today was just sparklers.” — CNBC’s Sean Conlon, Jeff Cox and Pia Singh contributed to this report.
