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Powell Continues To See Economy Avoiding Sharp Downturn

FED
  • Q: Are you more confident about the prospects of a soft landing?
    • A: I continue to think that there is a path to getting inflation back down to 2% without having to see the kind of sharp downturn and large losses of employment that we've seen in so many past instances. A strong labor market that gradually cools could aid that along. The FOMC is completely unified in the need to get inflation down to 2% and will do whatever it takes to get it down to 2% over time. Getting price stability restored will benefit generations of people - it is the bedrock of the economy and that is our top priority.
    • I wouldn't put too much weight on forecasts even one year out because they're highly uncertain. As inflation comes down in the forecast, then real rates are going up, so just to maintain a real rate, the nominal rate should come down just to maintain real rates.
    • Real rates are going to have to be meaningfully positive and significantly so for us to get inflation down. That certainly means that it will be appropriate to cut rates at such time as inflation is coming down really significantly. And we're talking about a couple years out. I think as anyone can see, not a single person on the committee wrote down a rate cut this year, nor do I think it is at all likely to be appropriate if you think about it.
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