Fed's Powell Says FOMC Not Actively Considering 75 bps Hike

(Updated - May 4, 2022 3:00 PM EDT)

(Updated - May 4, 2022 2:31 PM EDT)

Fed's Powell Begins News Conference Following FOMC Decision to Raise Rates 50 bps

• Inflation is much too high
• have tools, resolve to restore price stability
• anticipates ongoing increases in rates
• underlying momentum in the economy remains strong
• labor market has strengthened, remains tight
• labor supply remains subdued
• implications of Russia-Ukraine war high uncertain
• FOMC policy will continue to adapt
• on path to move rate expeditiously
• additional 50 bps hikes on table for next couple of meetings
• economy evolves in unexpected ways, need to be nimble
• economy very strong in position to handle tighter policy
• begins Q&A
• Expects Job Creation Will Slow
• Possible Jobless Rate Will Go Down Further
• Wages are running high especially in services sector
• Powell Thinks Wage Inflation Will Moderate
• Good Chance of Soft, or Softish Landing
• on potential larger rate hike, Powell says Not Actively Considering 75 bps Hike
• Expects to see Inflation flattening out, maybe not drop
• Will Look at policy effect on financial conditions
• If higher rates are required won't hesitate to deliver them
• Can't run risk of wage-price spiral, unanchored expectations
• There's a job to do on demand
• War, China Lockdowns Weigh on Supply-Chain Healing, Add to Headline Inflation
• Plenty to be done on dealing with excess demand
• FOMC Can Have More of an Effect on Core Inflation
• No Goal on Vacancies/Unemployment Ratio
• Not targeting specific market on financial conditions
• Fed Understands Pain of Inflation
• Higher Rates Isn't Pleasant Either, Everyone Better off
• Economy Doing Fairly Well
• This is Strong Economy, Nothing Suggests Close to or Vulnerable to Recession
• Fed Will Stick in Our Lane, Focus on Inflation Job
• Possible Policy Will Have to Move to "Restrictive", If We Have Too We Will
• Volcker Had Courage to Do What He Thought Was Right
• Without Price Stability, Economy Doesn't Work for Anyone
• Decision on How High to Go to be Made When Neutral Met
• Nothing Magic About Start Date for Balance Sheet Rundown
• Fed Doesn't Have Credibility Problem
• Markets Think That FOMC's Forward Guidance is Credible

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