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Powell Says "Least Unlikely"

MACRO ANALYSIS
  • Lagarde follows Powell in saying: Catch-22 issue is that we have an expected catch-down, where services align with manufacturing, and that would be logical - and see prices go down in that sector.
  • However, the catch-up is that services are labour-intensive, and how that catch-up vs. catch-down issue resolves itself is critical for where inflation is headed over time.
  • Powell says: Still seems to be a path for rebalancing without large job losses. Cites JOLTs coming down as evidence that jobs market not as tight as it was 2 or 3 years ago, as evidence of softening they're looking for.
  • "Least unlikely" case is that we find ourselves in better balance [...] without a recession.

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