The Fed faces a big challenge in assessing the impact of the rate hikes it has already delivered. Powell and other Fed members are trying to judge the impacts on the economy and the banking system.
It's clear the manufacturing sector is slowing significantly but the services sector is the vast majority of the US economy and here's the chart of the services PMI from S&P Global.
That doesn't look like a slowdown.
We will get the final reading on March at 9:45 am ET, 15 minutes before the more-influential ISM services report.
There, the chart paints something of a different picture, though it doesn't yet include the latest month. The consensus is for a small improvement to 51.8 from 51.2.
Whatever the result is, I believe the Fed is justified in shifting to the sidelines to see how the economy develops in the months ahead but many Fed officials want to make sure inflation is crushed (and perhaps the economy with it).
