Fedspeak recap: Odds of a January or March fee minimize dwindle

It has been a deluge of Fedspeak today but it hasn’t provided much clarity. The market is pricing in just at 9% chance of a cut at the Jan 28 meeting as we head towards the blackout. For March it’s at 26% and for April it’s at 60%. , But if you’re looking for a unified front from the central bank, you won’t find it today. We’ve heard from Kashkari, Bostic, Paulson, and Miran in rapid succession, and the signals on the rate path for 2026 are clashing but clearer if you look closely.

Neel Kashkari is leading the charge for patience. In an interview with the NYT and comments on the wires, he was explicit: it is “way too soon” to cut rates. He argues that interest rates should be held steady this month, citing an economy that is “confusing” but overall quite resilient. While he admits inflation is heading down, he remains wary of cutting too early given elevated price levels. He also took time to defend the independence of the central bank and Chair Powell.

Raphael Bostic is in Kashkari’s corner as he approaches his February 28 retirement. He noted that the inflation challenge “has not been won yet” and that the economy is likely to get stronger as we go through 2026. His takeaway is that a “passive posture” isn’t appropriate right now; policy still needs to be restrictive.

On the other side, we have Paulson and Miran striking a decidedly softer tone. Paulson describes the baseline economic outlook as “pretty benign” and explicitly sees further rate cuts later this year if forecasts are met. She characterizes current monetary policy as only “a little restrictive.” Meanwhile, Miran did his usual song and dovish dance. This time he argued that deregulation acts as a positive productivity shock that should put downward pressure on prices—another reason, in his view, to cut rates. His term is over at the end of the month but will stay on the board until a successor is confirmed.

Here are the key headlines:

1. KASHKARI: WAY TOO SOON TO CUT RATES

2. PAULSON: SEES FURTHER RATE CUTS LATER THIS YEAR IF FORECAST MET

3. BOSTIC: THE INFLATION CHALLENGE HAS NOT BEEN WON YET

4. KASHKARI: INTEREST RATES SHOULD BE HELD STEADY THIS MONTH

5. MIRAN: DEREGULATION SHOULD PUT DOWNWARD PRESSURE ON PRICES, JUSTIFYING RATE CUTS

6. PAULSON: BASELINE ECONOMIC OUTLOOK IS ‘PRETTY BENIGN’

7. KASHKARI: IF MONETARY POLICY IS REALLY SO TIGHT, WE SHOULD NOT SEE AN ECONOMY EXHIBITING SUCH RESILIENCE

8. BOSTIC: AS WE GO THROUGH 2026 THE ECONOMY IS LIKELY TO GET STRONGER

9. PAULSON: INFLATION SHOULD BE AROUND 2% RUN RATE BY YEAR END

10. KASHKARI: TARIFFS HAVEN’T BEEN THE GUT PUNCH MANY FEARED