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Powell: Possible We Have What I Would Hope Would Be A Mild Recession

FED
  • Q: At least half of Fed officials' projections seemed to imply a recession was the baseline forecast, could you elaborate why you are optimistic that a recession could be avoided?
  • A: I know what's in the SEP; I don't think you can deduce exactly what participants think because you don't know what they were thinking for first quarter GDP at that point. I continue to think it's possible that this time is really different due to so much excess demand in the labor market. That would be against history, but wage increases have been moving to a more sustainable level; I think it's still possible. The case of avoiding a recession is in my view more likely than that of having a recession, but I don't rule out a recession either, it's possible we have what I would hope would be a mild recession.
  • Powell answers a follow-up question about wage growth being above what is consistent with the 2% target - conclusion after running through several indicators is that "wage increases closer to 3% roughly is what it would take to get to be consistent with inflation over a longer period of time." Says that he doesn't think wages are a principal driver of inflation.
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