BOTTOM LINE:
MAIN POINTS:
BOTTOM LINE:
Chair Powell reiterated that the Fed will make “continued expeditious progress toward higher rates,” and noted “financial conditions have already priced in additional rate increases, but we need to go ahead and have them” at today’s hearing in the Senate Banking Committee.
Chair Powell also noted that the Fed would not engage in active sales of mortgage-backed securities anytime soon.
Powell emphasized that while the FOMC is “not trying to provoke and do not think we will need to provoke a recession,” it remained “absolutely essential” for the Fed to restore price stability, and noted that it would be “very challenging” for the Fed to achieve a soft landing.
MAIN POINTS:
1. Chair Powell reiterated that the Fed will make “continued expeditious progress toward higher rates,” and noted that the recent inflation data had “suggested that we needed to accelerate the pace at which we get up to a level that is close to the longer-run neutral level, and then we can make an assessment on how much further and faster to go” at today’s hearing in the Senate Banking Committee.
Powell also said that “financial conditions have already priced in additional rate increases, but we need to go ahead and have them,” and emphasized that “everything is going to depend on the data that we see.”
While he reiterated that the Fed “will be looking for compelling evidence that inflation is moving down” in setting policy, Powell also noted that “there’s some evidence that swage growth] is flattening out.”
Chair Powell stated that the Fed would only consider selling mortgage-backed securities “when the normalization process for the balance sheet is well under way, and that means not soon.”
2. Powell noted that a recession is “certainly a possibility,” and emphasized that while the FOMC is “not trying to provoke and do not think we will need to provoke a recession,” it remained “absolutely essential” for the Fed to restore price stability
He also argued that “the events of the last few months around the world have made it more difficult for the Fed to achieve a soft landing, which he noted would be “very challenging” to accomplish.
