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Powell: Don't Expect 75bp Moves To Be Common, Will Remain Data- Dependent

FED
  • Notes activity in housing sector appears to be softening.
    • SEP shows GDP running below 3%.
    • Labor market has remained extremely tight. Improvements in labor market have been widespread; demand strong, supply subdued. We expect supply and demand conditions to come into better balance and temper wage growth.
    • Unemp rate in SEP noticeably above the March projections.
    • Supply constraints have gone on longer than anticipated. Price pressures have broadened.
    • China lockdowns are likely to exacerbate supply chain disruptions.
    • Inflation SEP forecasts upped this year; participants continue to see risks to inflation as weighted to the upside.
    • Highly attentive to risks inflation poses to our dual mandate.
    • Policy will continue to adapt.
  • Coming out of the May meeting, 50bp considered appropriate; but we said we would be nimble; since then inflation has again surprised to the upside and some expectations have risen. In response, Fed decided a larger increase was warranted, continuing the approach of expeditiously hiking. This will help ensure longer-term infl expectations remain well-anchored.
  • Goes over the Dot Plot, says rates remain above the longer-run dot in 2024 (and it's not a committee forecast).
  • Will be data dependent. Don't expect 75bp moves to be common. Either 50 or 75 more appropriate at next meeting
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