Q&A from Fed’s Powell: No need to redefine price stability

As the Q&A session begins for Fed Powell, stocks have rebounded off their lows:

• S&P index -29.26 points or -0.51% at 5709.26.
• NASDAQ index -131.35 points or -0.73% at 17937.91.
• Dow industrial average -119.66 points or -0.28% for 2459.42.

Some of the comments:

• No need to redefine price stability.
• I don’t think we need to rethink how we look at inflation
• The general thought is that a one-time jump in prices does not need a monetary policy response
• Still very uncertain about what will be tariffed and for how long if it turns into a series of actions, or if tariffs are larger, or expectations start to move, that would influence how the Fed reacts.
• The costs of being cautious are very very low.
• The cost of the Fed being cautious is low.
• The economy does not need the central bank to do anything right now.
• The Fed is trying to work with large data sets I.e. credit card companies, to get real time information, and it is very helpful.
• Cannot say how long the burst of porductivity will last, but some estimates of potential growth are being marked up.
• Most indications are that a productivity burst is a one-time event.

Stocks have moved higher:

• Dow industrial average is down -15 points or -0.04% at 42567.
• S&P is down -13 points or -0.23% at 572-5118.
• NASDAQ index is down -73 points or -0.42% at 17995.

In summary:

There is no need to redefine price stability or reconsider how inflation is measured. A one-time jump in prices does not necessarily warrant a monetary policy response. However, uncertainty remains regarding the scope and duration of tariffs—if they become a series of actions, grow larger, or shift market expectations, the Federal Reserve may need to adjust its approach.

For now, the Fed sees little urgency to act, as the costs of being cautious are very low. The economy does not require immediate intervention from the central bank. To improve decision-making, the Fed is leveraging large datasets, such as credit card transactions, for real-time economic insights, which have proven useful.

While recent productivity gains have led to some upward revisions in potential growth estimates, most indications suggest that this productivity surge is temporary rather than a sustained trend. The Fed remains watchful but sees no immediate need for policy adjustments.

The Fed will enter the blackout period on Saturday. The Fed will announce their next rate decision on March 19.

This article was written by Greg Michalowski at www.forexlive.com.