Fed’s Powell: Today’s PCE report is ‘pretty much in line with our expectations’

Federal Reserve Chair Jerome Powell is speaking at the San Francisco Fed in a moderated discussion with Marketplace host Kai Ryssdal. This page will be updated live with new comments as they come.

• Says today’s data was ‘good to see’
• To get confidence on inflation we want to get more good reading on inflation like the ones last year

I find it notable that he didn’t highlight this report but ‘last year’.

• We didn’t overreact to good data in H2 last year
• You won’t see us overreacting to the last two months’ data
• Risks are too sided, the first cut is a very important decision
• The economy is strong, we see very strong growth
• We don’t need to be in a hurry to cut
• We’ve divided our critics into equal-sized piles
• Monetary policy is well-placed to react to different data
• I have scheduled calls with every voter and non-voter before every meeting, sometimes twice

There is a slightly-more hawkish tone from Powell. He hasn’t yet said they’re on track to cut rates this year.

• We would hold rates for longer if inflation doesn’t come down (note, no reference to hikes)
• We expect inflation to come down as our base case
• We don’t know where rates are going back to when this whole thing is over
• My own expectation is that we won’t get to the very low levels before the pandemic (rates were at 1.50-1.75% in late 2019)
• If we were to see unexpected weakness in labor market that could draw a policy response
• Slowing balance sheet runoff is not in any way related to a view of the economy

This article was written by Adam Button at www.forexlive.com.