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Chair Powell Asked On Statement Changes Regarding Price Pressures

FED
  • Q: On Statement changes re easing inflation and Ukraine war causing price pressures
  • A: We can now say for the first time: the disinflationary process has started. We can see it. We see it, really, in goods prices so far. This is what we thought would happen in the very beginning. Now it is happening, the supply change shortages and demand revolving back to services.
  • That is a good thing, but it is around a quarter of the core price index, so the second quarter the housing services. That is driven by very different things. As I mentioned with housing services, we expect, and other forecasters expect measured inflation will continue moving up for several months, but then will come down, assuming new leases continue to be soft.
  • We expect to see that disinflation process will be seen, we hope soon, in the core services ex-housing sector I talked about. We don't see it yet. It is seven or eight different kinds of services, not all of them the same, and we have a sense of what is going on in each each of the subsections would show is sensitive to slack. So the labor market will probably be important in some, and not important in some of the other ones.
  • It is not that we are neither optimistic or pessimistic. We are just telling you we don't see inflation moving down yet in that large sector. I think we will, fairly soon, but we don't see it yet.
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