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Powell: Another Unusually Large Increase To Depend On Data

FED
  • Chair Powell expands on the statement change re econ activity softening, but labor market remaining strong:
  • Growth in consumer spending has slowed "significantly" - Some of that reflects lower real disposable income and tighter financial conditions.
  • Business investment looks to have declined in Q2. Housing activity has weakened in part due to higher mortgage rates.
  • BUT the labor market has remained "extremely tight". Improvements in job market conditions have been "widespread". Demand is "very strong" while supply "remains subdued". Overall, the labor market strength suggests that underlying aggregate demand remains solid.
  • Powell says inflation remains well above 2%; goes through June's CPI data points. " Notwithstanding the recent slowdown in overall economic activity, aggregate demand appears to remain strong." Supply constraints larger and longer-lasting than anticipated.
  • While another unusually large increase could be appropriate at our next meeting, depends on data.

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