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No Discussion Of QT Changes With Powell Seeing Reserves As Ample (2/2)

FED
Powell noted that they still weren't seeing progress on core services ex-housing PCE and if anything inflation is possibly moving in the wrong direction ("I will say the data we got really pointed to stronger inflation.") The move to 2% inflation "has a long way to go and is likely to be bumpy".
  • Powell said the FOMC hasn't discussed QT policy changes, though noted a couple of times that they were willing to make changes if they concluded it was appropriate. There had been some expectation coming into the meeting that they could even stop QT immediately today.
  • It sounded from Powell's response to the the question on system reserve management that they don't foresee see themselves running short, which means that QT is likely to continue at its current pace for some time yet.
  • He spoke briefly about non-linear effects of a recession almost as if it were the baseline scenario. As for a "soft landing", that's certainly what the SEP suggests, and as he said, "there's still a pathway to a soft landing, we're certainly trying to find it."
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