Powell Says 75bps Hike Not Being Actively Considered

Q: The Unemp rate is at the bottom end of the SEP's longer-run rate projections. How has your outlook changed and what does it imply for inflation.

• A: We expect we will get additional participation with people coming back into the labor force, that will tend to hold the unemployment rate up a little. Would expect job creation will slow, vs more than half million a month recently - very very strong, particularly for this stage of the economy.
• So with less supportive fiscal and monetary policy, we think job creation will slow. It's certainly possible unemp rate will go down further, but that would be limited by additional supply and slowdown in job creation.
• Wages are running high, a good illustration of how tight the labor market is. We like to think that supply and demand will come into balance, and that wage inflation will moderate to still-high but more consistent with 2% inflation.
• There's a path to have demand moderate in the labor market, and have vacancies come down without unemployment going up because vacancies are so high. That would give us a chance to get inflation and wages down without having to slow the economy and have a recession. We have a good chance to have a softish landing/outcome due to strong household/business balance sheets, and strong labor market.

Q: Why 50bp? Why not bigger or smaller?

• A: 75bp increase is not something the committee is actively considering.