Fed Chair Jerome Powell said in an interview that “what we were actively considering, and this is just a factual recitation of what happened at the meeting, was a 50-basis point increase… if the economy performs about as expected, that it would be appropriate for there to be additional 50-basis point increases at the next two meetings”.
Powell also said that a “soft landing”, getting back to 2% inflation while keeping the labor market strong, is “quite challenging to accomplish that right now”. Unemployment is “very, very low”, the labor market’s “extremely tight”, and inflation is “very high”.
“What we can control is demand, we can’t really affect supply with our policies. And supply is a big part of the story, here. But more than that, there are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so. So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control,” he explained.
Full interview here.
Fed Bullard: We have a good plan for now
St. Louis Fed president James Bullard reiterated that “we have a good plan for now”, in raising interest rate by 50bps at the next couple of meetings. He hoped that could bring inflation down with “the least amount of disruption we can get.”
Bullard also said growth in range of 2.5-3.0% is ” “fast compared to the long run potential rate of growth” of the economy, which may be just below 2%. Also, “labor markets are super strong…Household consumption is expected to hold through this year.”.
People “want to put the pandemic behind them and they have lots of plans about spending,” Bullard added.