Why Fed's Powell doesn't seem fazed by stubborn inflation data
Federal Reserve Chairman Jerome Powell seemingly shrugged off hotter-then-expected inflation data, saying the data points "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road towards 2%."
In the video above, Yahoo Finance Federal Reserve Reporter Jennifer Schonberger recaps some of the top takeaways from Powell's press conference.
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Editor's note: This article was written by Stephanie Mikulich.
Video Transcript
JULIE HYMAN: Well, we've just heard from Jay Powell confirming that the Federal Reserve is holding rates for an eighth straight month. Our own Jennifer Schonberger was in the room. Of course, she got a question there. And brought up the rear here and joining us live from Washington. So what was your impression there from being in the room, from seeing Jay Powell in person? And as you've had a few minutes, at least, to digest what you heard.
JENNIFER SCHONBERGER: This just a couple of minutes there, Julie. Yeah. I thought it was very interesting that Chair Powell and the Fed don't really seem to be fazed all that much by the hotter inflation data that we saw in the first two months of this year. He says it really doesn't change the overall inflation picture for the Fed all that much. Now does it inspire greater confidence? No. Not exactly. Take a listen to what he said.
JEROME POWELL: We have at currently well below 30 basis points core PCE, which is not terribly high. So it's not the January number. But I take the two of them together. And I think they haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road toward 2%. I don't think that story has changed, I also don't think that those readings added to anyone's confidence that we're moving closer to that point.
JENNIFER SCHONBERGER: And now Powell would not show his hand on the timing for the potential first rate cut and whether June, may be even pushed back. When asked about that, he just said decisions are going to be made on a meeting by meeting basis. Though I thought it was interesting because the chairman used language that he's been using all year to categorize timing saying that it would be appropriate at some point this year to begin dialing back policy restraint.
He didn't shift to using language like later this year, that some of his colleagues have chosen to use. So that indicates to me that June is still very much in play if the inflation data softens some more from here and continue following as they have when it comes to core PCE on a month over month basis. Now on the balance sheet, the chairman said that the members of the committee did have a discussion on this.
But they did not make any decisions today. They believe, though, that it will become opportune to slow the pace of quantitative tightening quote fairly soon. That doesn't mean he says though, that the Fed will end up with a larger balance sheet. In fact, they could still end up with a smaller balance sheet, guys.
JOSH LIPTON: Jen, were you-- you've been a lot of these pressers. You've covered them so closely. Anything from the meeting today? Anything Jay Powell said that surprised you Jen?
JENNIFER SCHONBERGER: Anything that surprised me? I mean, I thought it was interesting that he just would not touch timing and that even though they have upgraded their assessment of the economy and inflation that they are still retaining three rate cuts this year. Having said that, we did see some of the doves that were seeing four rate cuts previously back in December. Now coalescing more towards that median of three cuts.
But for the most part, the fact that they still see easing that much I think is quite interesting and telling given that he also said that they don't feel the holistic picture for inflation has changed all that much, even though we've had those hotter inflation data for the first two months of this year.
JULIE HYMAN: Jen Schonberger, thanks. Appreciate it.
