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It's been slow going from the Fed chair thus far:
- Markets have been digesting an unusually challenging set of circumstances
- Enormous benefits of having the dollar as the reserve currency
- Asked about recent USD weakness, says markets have been digesting an unusually challenging set of circumstances
- He is open to possibility that tariff translation to inflation could be more or less than anticipated
- The bond market is functioning well
- Waiting to see what shows up in measured inflation
- Tariffs might well be a one-time inflation event
- If we make a mistake on tariff inflation, people will pay the cost for a long time
- Not seeing stagflation now, it's not the base case
- If there were stagflation it would put the Fed in a tough place
- Does not want to give a lot of forward guidance
- Makes sense to move slowly when there is more uncertainty, in most cases
- Economy growing, inflation is in a pretty good place
- Watching labor market very carefully
Powell's comments haven't had any market impact today. The market is pricing in 60.6 bps of easing into year end.
