Free Trial

Chair Powell Does Not Have a Probability Estimate For Cuts This Year

FED
  • Q: Has the probability of no cuts this year increased or stayed the same since the start of the year? Is there an argument to be more patient on inflation given productivity growth?
    • A: I don't have a probability estimate for you...I think the economy has been very hard for forecasters broadly to predict its path. But there are paths to not cutting. And there are paths to cutting. It's really going to depend on the data.
    • Re employment: Our framework says when you look at the two mandate goals, if one of them is further away from the goal than the other, then you focus on that one. Our focus was very much on inflation. As inflation has come down ...we're now focusing on the other goal. The employment goal now comes back in to focus.
  • Q: You think the likeliest path of inflation is one that will allow you to lower rates? And re Q1 GDP, was it stagflationary?
    • A: I'm not dealing in likelihoods. There are paths that the economy can take that would involve cuts. And there are paths that wouldn't. I would say my personal forecast is that we will begin to see further progress on inflation this year. I don't know that it will be sufficient. I don't know that it won't. We're going to have to let the data lead us on that.
    • Re stagflation : I was around stagflation, it was 10% unemployment, high inflation, and very slow growth... I don't see the stag or the flation, actually.
251 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • Q: Has the probability of no cuts this year increased or stayed the same since the start of the year? Is there an argument to be more patient on inflation given productivity growth?
    • A: I don't have a probability estimate for you...I think the economy has been very hard for forecasters broadly to predict its path. But there are paths to not cutting. And there are paths to cutting. It's really going to depend on the data.
    • Re employment: Our framework says when you look at the two mandate goals, if one of them is further away from the goal than the other, then you focus on that one. Our focus was very much on inflation. As inflation has come down ...we're now focusing on the other goal. The employment goal now comes back in to focus.
  • Q: You think the likeliest path of inflation is one that will allow you to lower rates? And re Q1 GDP, was it stagflationary?
    • A: I'm not dealing in likelihoods. There are paths that the economy can take that would involve cuts. And there are paths that wouldn't. I would say my personal forecast is that we will begin to see further progress on inflation this year. I don't know that it will be sufficient. I don't know that it won't. We're going to have to let the data lead us on that.
    • Re stagflation : I was around stagflation, it was 10% unemployment, high inflation, and very slow growth... I don't see the stag or the flation, actually.