Will Powell oversee another rate cut before he disappears?

Robert Ostrowski: Big movement yesterday with the Federal Reserve. RJ Gallo: So, I think the Fed didn't really surprise anyone yesterday. The markets were very well prepared for a 25 basis point cut; we got the 25 basis point cut. In fact, the markets had started to position for what they called a hawkish cut, that the Fed was going to lower rates, which in fact happened, but that it would be laced with commentary suggesting that they were done, for sure, or that inflation is a rising concern, maybe balancing the objective of supporting the slowing employment markets but at the same time countering inflation concerns. Instead, I think Chair Powell at the podium painted a different picture. He seemed to still weigh the slowing in job creation more heavily than the lingering inflation concerns. And as a result, market yields came down a little bit. I still think there was a tone there that we might not see another Fed ease under Chair Powell's leadership. He'll be done this spring, he will be replaced probably by Hassett but we will see. Trump can be mercurial. Ultimately, I think the bond market is probably set for a bit of a range trade, where the impetus that we've had of fed cuts to draw yields lower is probably fading. We want to see what Hassett embraces-- probably will be more dovish than Powell, but it's pretty clear that the policy outcome is a process of a committee. Hassett can't just come in there and just declare it so. As a result, I think the bond market's going to be in a bit of a range trade so long as the economy holds up. And I think in 2026 the base case is you got some fiscal expansion coming along, recession probability seems low and the Fed's probably going to be done for a little while. Ostrowski: You mentioned that the end of the tenure, and I thought it was interesting that he spent time on that in the Q and A. And my own take was that maybe he errs on the side of just making sure that the job weakness we are seeing now is maybe a little higher priority than the actual 2%. Gallo: I think that's a good point. Nobody wants to finish their tenure at the Fed, whether they're a governor, and certainly not the Chair, and see a recession unfold. The last thing he wants is to support, ultimately, sort of a healthy economy; keep unemployment rate with the four handle. In fact, this Summary of Economic Projections continues to forecast that unemployment will go back down.