Podcast Selection: PIMCO Economists Interpret Fed's October Pause as 'Policy Recalibration'
PIMCO economists Tiffany Wilding and Graeme Westwood discuss the US Federal Reserve's October decision to hold rates steady in the latest PIMCO Pod episode. They argue this pause represents a policy recalibration rather than the start of a prolonged hiking cycle, with expectations for another hike in December.
In the latest episode of the PIMCO Pod, titled "Fed Pauses as Rate Recalibration Continues," economists Tiffany Wilding and Graeme Westwood analyze the US Federal Reserve's October meeting outcome. The discussion centers on why the central bank chose to hold its policy rate steady at 3.75%–4.0% despite strong growth and elevated inflation.
Wilding and Westwood characterize the current phase not as the beginning of a new, aggressive rate-hiking cycle, but as a "recalibration" of monetary policy. Their baseline expectation remains for another 25-basis-point hike in December, followed by a potential additional increase in early 2027 before an extended hold.
The episode explores the rationale behind the pause, noting that Chair Kevin Warsh indicated policymakers want more time to assess how previous tightening measures are affecting the economy. The analysts highlight that while financial conditions have tightened due to rising long-term Treasury yields, the committee remains wary of allowing above-target inflation to persist.