Organizing Chair Jerome Powell’s comments by topic helps in understanding the Federal Reserve’s comprehensive approach towards economic indicators, monetary policy, and financial stability. Here’s an organized summary:Labor Market Observations
- Strength and Stability:
- “STRONG JOB GROWTH IS NOT A REASON FOR US TO BE CONCERNED ABOUT INFLATION.”
- “STRONG HIRING ALL BY ITSELF WOULD NOT BE A REASON TO HOLD OFF ON RATE CUTS.”
- “STRONG HIRING BY ITSELF WOULD NOT BE A REASON TO HOLD OFF ON RATE CUTS.”
- “ON LABOR MARKET, IF WE ARE GETTING A LOT OF SUPPLY AND DEMAND, YOU COULD POTENTIALLY HAVE A BIGGER ECONOMY WHERE INFLATION PRESSURES ARE NOT INCREASING.”
- “LABOR MARKET IS IN GOOD SHAPE.”
- “THINGS ARE RETURNING MORE TO THE PRE-PANDEMIC STATE.”
- “WAGE GROWTH MODERATING TO MORE SUSTAINABLE LEVELS.”
- “WE ARE SEEING STRONG LABOR MARKET, EXTREME IMBALANCES MOSTLY RESOLVED.”
- “DON’T SEE CRACKS IN JOB MARKET.”
- “DON’T SEE CRACKS IN THE LABOR MARKET.”
- Monitoring and Adjustments:
- “WE ARE CLOSELY WATCHING LAYOFFS.”
- “INITIAL CLAIMS ARE VERY VERY LOW.”
Inflation and Monetary Policy
- Inflation Concerns:
- “IT IS VERY IMPORTANT THAT WE DO GET INFLATION SUSTAINABLY DOWN.”
- “WE NEED TO TAKE TIME TO ASSESS IF RECENT INFLATION REPRESENTS MORE THAN BUMPS IN THE ROAD.”
- “RECENT INFLATION DATA HASN’T ALTERED STORY OF INFLATION COMING DOWN TO 2% ON A SOMETIMES BUMPY PATH.”
- “INFLATION DATA CAME IN A LITTLE BIT HIGHER THAN EXPECTED.”
- Policy Outlook:
- “WE MADE NO DECISIONS ABOUT FUTURE MEETINGS TODAY; WILL DEPEND ON DATA.”
- “WE ARE STRONGLY COMMITTED TO BRINGING INFLATION DOWN TO 2% OVER TIME.”
- “NEVERTHELESS, WE CONTINUE TO MAKE GOOD PROGRESS ON BRINGING INFLATION DOWN.”
- “WE WILL MAKE DECISIONS MEETING BY MEETING.”
- “WE WILL CAREFULLY ASSESS INCOMING DATA TO DECIDE POLICY.”
- “WE NEED GREATER CONFIDENCE INFLATION MOVING SUSTAINABLY DOWN BEFORE WE CUT RATES.”
- “LIKELY TO CUT RATES AT SOME POINT THIS YEAR.”
- “OUR POLICY RATE IS LIKELY AT ITS PEAK.”
- “WE ARE NOT GOING TO OVERREACT TO THESE TWO MONTHS OF DATA; NOR IGNORE THEM.”
Economic Stability and Financial Policy
- Financial Stability Measures:
- “WILL LIMIT RISK TO MONEY MARKET VOLATILITY.”
- “SLOWING PACE OF RUNOFF WILL ENSURE SMOOTH TRANSITION, MITIGATING CHANCE OF MONEY MARKET STRESS.”
- “GENERAL SENSE IS TO SLOW PACE OF RUN OFF FAIRLY SOON.”
- “OUR GENERAL SENSE IS WE WILL START RUN OFF FAIRLY SOON.”
- “ON BALANCE SHEET, WE DISCUSSED ISSUES RELATED TO SLOWING PACE OF DECLINE IN HOLDINGS.”
- “DISCUSSED BALANCE SHEET AT THIS MEETING.”
- Balance Sheet Management:
- “OUR LONG-RUN GOAL IS TO RETURN TO BALANCE SHEET THAT IS MOSTLY TREASURIES.”
- “WE ARE GOING TO PAY A LOT OF ATTENTION TO PAST MISTAKES ON BALANCE SHEET RUNOFF.”
- “IN GOING SLOWER ON BALANCE SHEET, WE THINK WE CAN GET FURTHER.”
- “IT WILL MEAN WE RUN MUCH MUCH LESS RISK ON LIQUIDITY ISSUES.”
Rate Decisions and Economic Outlook
- Interest Rates and Economic Health:
- “IT IS STILL LIKELY IN MOST PEOPLE’S VIEW THAT WE WILL HAVE RATE CUTS THIS YEAR. BUT DEPEND ON DATA.”
- “BUT THERE IS TREMENDOUS UNCERTAINTY AROUND THAT.”
- “MY INSTINCT IS RATES WON’T GO BACK DOWN TO VERY LOW LEVELS WE SAW BEFORE.”
- “INSTINCT IS THAT RATES WILL NOT GO BACK DOWN TO VERY LOW LEVELS.”
- “DON’T THINK WE KNOW THAT RATES WILL BE HIGHER IN THE LONGER
This article was written by Greg Michalowski at www.forexlive.com. Source