Powell Q&A: We don't see a strong case for moving in either direction

Author: Adam Button | Category: Central Banks

Powell answering questions

Powell May 1 Q&A
  • We see good reasons to believe the low inflation prints in Q1 will be transitory
  • Cites Dallas Fed trimmed mean at 2%
  • Repeats "we don't see a strong case for moving in either direction"
  • IOER move "really has no implications for policy"
  • There are some concerns about non-financial corporate debt
  • Households are in good shape from a leverage perspective
  • We don't feel like the data is pushing us in either direction
  • Says doesn't take Trump comments into account
  • Manufacturing has been weak all around the world
  • ISM manufacturing is still positive and we expect some positive contribution from manufacturing
  • Will look at a repo facility at a future meeting
  • "We don't see any evidence at all of overheating"
  • Wages are moving up as you would expect but not signaling overheating
There's an open question about whether the Fed is worries about inflation persistently below 2% and he's been grilled on it. So far, he's not giving up any ground but there's a bit of a groundswell pushing for the Fed to let inflation run above 2% to regain some credibility.

Powell is taking some heat for pushing the 'transitory' angle and even for taking a victory lap on cell phone prices. The bottom line is that inflation has been on target for about 2 months in the past 10 years. That's a lot of transitory events.
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