Reply To: Federal Reserve Raises Rates 25bps as Expected, Inflation has Eased Somewhat but Remains Elevated


Powell Q&A:

Expectation is that services inflation will not move down quickly so we’ll have to raise rates higher
Non-housing related services inflation will take a substantial period to get down
4.7% unemployment would still be a strong labor market
Appropriate thing to do is slow pace of hikes, will allow us to ‘feel our way’ but won’t say whether 50 bps or 25 bps
Need to see non-housing services sector “get into better balance”
“It’s now not so important how fast we go … It’s far more important to think what is the ultimate level, and then at a certain point the question will become how long will we remain restrictive.”
Key line:

“I wouldn’t see us considering rate cuts unless there’s confidence that inflation is moving down to 2%.”