That was like watching paint dry. Powell just kept saying some version of wait and see. “The costs to waiting are fairly low.”
Maybe the only interesting thing from the entire press conference was that he suggested the Fed may have been a little late to cutting rates in the fall. Would we already be in a recession if the Fed hadn’t eased off the brakes by 1.00%?
The Fed believes it is stuck waiting to see which way will the economy break. They can’t cut with the inflation dark cloud hanging over their head, unless real weakness in the labor market shows up.
For that reason, the Fed believes it can’t afford to be preemptive. “What if the sour negative sentiment fails to translate into weak hard data?”
I understand his rationale, but isn’t this how it always plays out? Doesn’t a negative economic shock catch us off guard and we all watch the wheels fall off before reacting?
I can’t help but think this is just the calm before the storm. By year-end, Powell will pine for the days like today. Of note, there is no chatter about the potential for rate hikes. While I agree, I was super wrong a few years ago…
This was an “off” meeting when the Fed does not release updated projections, but the June 18th meeting will. What will the year end forecast for Core PCE look like? 3.5%? 4.0%?