Powell Conveys Cautious Optimism On Inflation And Soft Landing (1/2)

Chair Powell's overall press conference message was a little more optimistic on the inflation front and on the potential for achieving a "soft landing" - but not more than the incoming data since the December meeting would warrant.

• Even as he said the Fed had more work to do, he also conceded "we can say for the first time the disinflationary process has started." But he qualified that by saying this was primarily in core goods prices, of whose recent deflation he said later in the press conference was likely to be transitory.
• Of the key core services ex-housing inflation categories, multiple times he noted he was cautiously optimistic, but only pending incoming data: "It is not that we are neither optimistic or pessimistic. We are just telling you we don't see inflation moving down yet in that large sector. I think we will, fairly soon, but we don't see it yet."
• Powell reminded that this was a "unique" period, and that means "it is just harder to forecast inflation." That said, he noted that he was becoming less worried about risks of a wage-price spiral: "I think it is becoming less salient".
• On a soft landing: "I still think and continue to think there is a path to getting inflation back down to 2% without a really significant economic decline or significant increase in unemployment. I think there is ongoing disinflation, and we don't yet see weakening in the labor market, so we will have to see."