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FED: Chair Powell Asked Why the Fed Would Cut Given the Data Trajectory

FED
  • Q: You see a cut this year but without growth slowing, employment weakening, and inflation averaging out to no change. Why would you cut?
    • A: We think policy is restrictive and if you set policy at a restrictive level, eventually you see real weakening in the economy. Not to eliminate the possibility of hikes, but no one on the Committee has that as their base case. We think ultimately rates will have to come down to continue to support good progress on inflation with growth at a good level and with a strong labor market. But so far, they haven't had to.
  • Q: Any concern for housing or financial stability from leaving rates so high for so long?
    • A: The housing situation is a complicated one, you can see that's where rates are having a significant effect.  Ultimately the best thing we can do for the housing market is to bring inflation down so we can bring rates down so that the housing market continues to normalize.   The banking system seems to be in good shape.
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