The predictable Jerome Powell..!
Updated
Jerome Powell is likely to say the following in the upcoming conference on Wednesday, September 20th:
* The Federal Reserve is committed to bringing inflation down to its 2% target.
* The Fed is prepared to continue raising interest rates until inflation is under control.
* The Fed is aware of the risks of a recession, but it believes that these risks are outweighed by the risks of high inflation.
* The Fed is monitoring economic data closely and will adjust its monetary policy as needed.
Powell may also discuss the following topics:
* The Fed's plans to reduce the size of its balance sheet.
* The impact of the war in Ukraine on the global economy.
* The Fed's outlook for the US economy.
"We expect economic growth to slow down below its average in the coming months, but we are important to avoid a recession."
Here are some specific quotes from Powell's previous FOMC press conferences that he may repeat or echo in the upcoming conference:
* "Inflation is running far too high, and we are strongly committed to bringing it back down to 2%."
* "We will continue to raise interest rates until we are confident that inflation is on a sustainable downward path."
* "We understand that high inflation is causing hardship for many Americans, and we are committed to doing everything we can to bring it down."
* "We are monitoring economic data closely, and we will adjust our monetary policy as needed."
* "We are committed to a smooth transition to a more neutral monetary policy stance."
"The US job market remains strong, with low unemployment and high job openings."
It is important to note that Powell's remarks at the upcoming FOMC conference will be based on the latest economic data and the FOMC's assessment of the risks and uncertainties facing the US economy.
However, e market reaction to a possible FED pause is almost unpredictable!
* The Federal Reserve is committed to bringing inflation down to its 2% target.
* The Fed is prepared to continue raising interest rates until inflation is under control.
* The Fed is aware of the risks of a recession, but it believes that these risks are outweighed by the risks of high inflation.
* The Fed is monitoring economic data closely and will adjust its monetary policy as needed.
Powell may also discuss the following topics:
* The Fed's plans to reduce the size of its balance sheet.
* The impact of the war in Ukraine on the global economy.
* The Fed's outlook for the US economy.
"We expect economic growth to slow down below its average in the coming months, but we are important to avoid a recession."
Here are some specific quotes from Powell's previous FOMC press conferences that he may repeat or echo in the upcoming conference:
* "Inflation is running far too high, and we are strongly committed to bringing it back down to 2%."
* "We will continue to raise interest rates until we are confident that inflation is on a sustainable downward path."
* "We understand that high inflation is causing hardship for many Americans, and we are committed to doing everything we can to bring it down."
* "We are monitoring economic data closely, and we will adjust our monetary policy as needed."
* "We are committed to a smooth transition to a more neutral monetary policy stance."
"The US job market remains strong, with low unemployment and high job openings."
It is important to note that Powell's remarks at the upcoming FOMC conference will be based on the latest economic data and the FOMC's assessment of the risks and uncertainties facing the US economy.
However, e market reaction to a possible FED pause is almost unpredictable!
Note
For data we estimate that total PCE prices road 3.4% over the 12 months ending in August and that excluding the volatile food and energy categories, core PCE prices rose 3.9%. Inflation has moderated somewhat since the middle of last year and longer term inflation expectations appear to remain well anchored as reflected in a broad range of surveys of households, businesses and forecasters as well as measures from financial markets.Nevertheless, the progress, the process of getting inflation sustainably down to 2% has a long way to go. The median projection in the SEP for total PCE inflation is 3.3% this year falls to 2.5% next year and reaches 2% in 2026.
Note
If the economy evolves as projected the median participant projects at the appropriate level of the federal funds rate will be 5.6% at the end of the year.5.1% at the end of 2024 and 3.9% at the end of 2025. Compared with our June summary of economic projections the median projection is unrevised for the end of this year, but has moved up by .5 percentage point at the end of the next two years.
Note
Real interest rates now are well above mainstream estimates of the neutral policy rate, but we are mindful of the inherent uncertainties in precisely gaging the stance of policy.We are prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we are confident that inflation is moving down sustainably toward our objective. In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time,
Note
CHAIRMAN POWELL: So the proposal at the meeting was to maintain our current policy stance, and I think there was obviously unanimous support for that. But this, of course, is an SEP meeting to people write down what they think and you have got, you have some, I think seven wrote down no hike at this meeting, or between now and the end of the year and I think 12 wrote down another single hike in one of the next two meetings that we have between the end of the year.Note
we are always going to be learning from data. We have learned all through the course of the last year that actually we needed to go further than we had thought. You go back a year and what we wrote down, it's actually gotten higher and higher.So we don't really know until, and that's why, again, we are in a position to proceed carefully at this point. A year ago we proceeded pretty quickly to get rates up. Now, we are fairly close, we think, to where we need to get. It's just a question of reaching the right stance. I wouldn't attribute huge importance to one hike in macroeconomic terms. Nonetheless, we need to get to a place where we are confident that we have a stance that will bring inflation down to 2% over time.
Note
we have seen inflation be more persistent over the course of the past year but I wouldn't say that's something that's appeared in the recent data. It's more about stronger economic activity, I would say.So if I had to attribute one thing, again, we are picking medians here and trying to attribute one explanation, but I think broadly, stronger economic activity means rates, we have to do more with rates and that's what that meeting is telling you.
Note
There may come a time when unemployment goes up more than that, but that's really what we have been seeing is progress without higher unemployment for now.Note
Then the question is how long do you stay at that level and that's another set of questions. Forenow the question is trying to find that level where we think we can stay there. And we haven't gotten to a point of confidence about that yet.Note
I think the question is GDP is not a mandate. Maximum employment and stability are the mandates. The question is does GDP, is the heat we see in GDP is it a threat to our ability to get back to 2% inflation.Note
There is a long list, and you hit some of them, but it's the strike, it's the government shutdown, resumption of student loan payments, higher long-term rates, oil price shock. There are a lot of things that you can look at, and, you know, so what we try to do is assess all of them and handicap all of them. Ultimately though there is so much uncertainty around these things.Note
ou can have a long period where the economy is just very uncertain and it will affect growth, it will affect all kinds of things. It can be a miserable period to have inflation constantly coming back and The Fed coming in and having to tighten again and again.So the best thing we can do for everyone, we believe, is to restore price stability. I think now today we actually, we have the ability to be careful at this point and move carefully. That's what we are planning to do.
Note
Market reaction to JPowell 
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