Powell Q&A: I do think policy is restritive and weighing on demand

• Cites JOLTS report, including quits as a sign labor market coming into better balance
• I think it’s clear that policy is restrictive and that over time it will be sufficiently restrictive, the data will show if that’s so
• We’re committed to current restrictive policy for as long as it’s appropriate and we’ll do that
• I think it’s unlikely the next policy move will be a hike
• I think we would need to see persuasive evidence that our policy isn’t restrictive enough, I don’t think we’re seeing that
• We think our policy is well positioned to address different paths the economy might take
• I think there are paths that we could embark on rate cuts
• We want to see high wages but we don’t want to see them eaten up by inflation
• Part of getting inflation to target probably means wage hikes to more sustainable levels
• We don’t know how long it will be before we can cut rates
• My expectation is over the course of the year that inflation will move back down but my confidence in that is lower
• Thinks lower rents will show up over time, after substantial lags work through data
• I don’t see the ‘stag’ or the ‘flation’ and I was around for stagflation
• Restrictive policy is doing what it’s supposed to do
• I’ve been on the Fed for four Federal elections, look at the transcripts, there’s no political wrangling

Powell was repeatedly baited with hawkish questions but deftly dodged them, making it clear that the baseline is to either cut or hold longer.

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