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Friday’s headline PCE report, coming in at +2.8% y/y in February, was “more or less in line with our expectations… it’s nice to see something in line with expectations,” the company president said Federal Reserve Jerome Powell during an interview at the San Francisco Fed Conference on Macroeconomics and Monetary Policy on Fridays.
Today’s report is “more or less in line with what we want to see,” he added, noting that he still wants to see more “good” inflation data.
“Growth is strong right now” and the Fed will be careful with its decisions. Strong growth means the central bank need not rush, she said.
12:09pm ET: “We will not take the step” of cutting rates until the Fed is confident that inflation is on a sustainable path to 2%. With this the interview concluded.
12.08pm: “Productivity is a key factor” in explaining why the U.S. economy is stronger than most other economies, Powell said.
12:06pm ET: The Fed must “be forceful when appropriate” to avoid further Silicon Valley Bank-related situations.
12:05pm ET: The banking system is in good shape and has calmed down after tensions a year ago, he said. Commercial real estate issues “will be with us for some time.”
12:02pm ET: An independent Fed has broad support from both parties, Powell said.
11:56am ET: The Fed’s actions do not drive growth in the US economy, Powell said. Rather, the central bank’s role is to keep the economy stable and to intervene during times of crisis, he added.
11:53am ET: The Fed’s relatively recent policy of telling the public what it is doing and why helps the central bank implement monetary policy, he said. This contrasts with his previous policy of not saying anything to the public. The Fed did not begin announcing its rate actions until 1994.
11:50am ET: As for the Fed’s expectation that the pace of balance sheet outflow will soon slow, “the point is that we want to be transparent and predictable” to avoid market disruptions.
11:49am ET: Asked what would happen if the Fed lost its political independence, Powell responded that countries with central banks with weak or no independence have no price stability.
11:46am ET: When asked about Powell’s legacy, he said, “The thing I care about most… we aspire to be that place that transcends politics… I feel responsible and accountable that the institution passes that on to the generation next one”.
11:45am ET: “Is the possibility of recession high right now? I would say not,” he said.
11:42am ET: As inflation approaches 2%, the Fed sees risks to both of its mandates – stable prices and full employment – in better balance. Therefore, the central bank may pay more attention to the employment part of its mandate than when inflation peaked. However, “the work will not be finished” on inflation until it is down to 2%.
11:39am ET: “We really don’t know where rates are going to go when this whole thing is over,” Powell said. “My sense is that I don’t think rates are going to go down to the very low levels they were at before the pandemic.” Short-term rates are likely to fall from where they are now, she said.
11:37am ET: “We’ll just have to let the data tell us” whether the rise in inflation in January and February is just an increase in the economy or something more.
11:36am ET: “Inflation went up, stayed high and took a long time to heal,” Powell said while discussing how the economy has not recovered and inflation has not been as transitory as the Fed expected it to be at the time. following the pandemic.
11:32 am ET: Powell said he has scheduled meetings with all voting and non-voting members of the Federal Open Market Committee ahead of the committee’s policy meetings. This helps build consensus, although it’s not a problem if there is some dissent in the FOMC, he said.
Updated at 11:30 a.m. ET: Monetary policy is well positioned to react to a number of different paths for the economy, Powell said.
Development… check back for updates.
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