🇺🇸 Jerome Powell (head of #FED)
✔ Inflation has dropped significantly, progress in the economy.
✔ The further path is uncertain.
✔ Risks become more balanced.
✔ US GDP is supported by high consumption. demand and the “improvement” of supply chains.
✔ The Fed expects further improvement in the labor market.
✔ Inflation forecasts remain unchanged.
✔ Salary growth is weakening.
❗️ Perhaps at some point we will reduce the rate this year, but the prospects are uncertain.
✔ The rate has probably reached its peak.
✔ Unexpected weakness in the labor market - we will respond immediately!
✔ We are ready to keep the rate high if required!
❗️ We discussed with the chairs the SLOWdown of the Fed's balance sheet contraction (QT)
✔ Our forecasts do not mean that we have accepted the current level of inflation.
✔ Demand for goods, I believe, will continue to strive for balance with supply.
✔ Bilateral risks in the US economy - current realities.
❗️ Inflationary spikes in January and February are seasonal adjustments. Nothing terrible!
✔ If the labor market weakened significantly, we would promptly reduce the rate.
✔ A significant weakening of the labor market is a reason for the Fed to lower the rate.
❗️My intuition tells me that the Fed rate will not drop to the levels we have seen in past years.
✔ We need to see more data - we need confidence in a further decline in inflation.
✔ No one knows whether rates will be even higher in the long term.
✔ There remains a HIGH level of uncertainty around all of this.
✔ Most believe that the Fed will cut rates this year, but EVERYTHING will depend on the data.
✔ STRONG job growth is NOT a reason to worry about inflation.
✔ It is NORMAL if there is more stable inflation in the US in the 1st half of the year.
✔ Financial conditions (current), of course, put pressure on the country's economy.
✔ If there is a lot of demand, but the supply does not lag behind, inflation will not rise.
✔ We need more time to evaluate winter inflation data.
❗️NO MORE crazy imbalance in the labor market!
❗️We expect the unemployment rate to RISE!
❗️There are no deadlines for reducing the rate of balance contraction (QT) ... SOON. That's all I can say.
✔ We want to avoid turbulence. This is the main reason for the slowdown in the balance sheet contraction (QT) rate.
✔ We closely monitor liquidity - we monitor money markets in order to stop reducing the balance sheet (selling Fed assets) IN TIME .
✔ We think it could further reduce the Fed's balance sheet.
✔ It is important to monitor inflation data.
✔ We remember 2019. We take into account all the data in order to avoid major liquidity problems.
✔ Questions about CBDC have become very relevant in recent years, but the Fed does not have a secret laboratory to create such a currency.
❗️We are still very far from creating a CBDC. There is no active work in this direction.
✔ The Fed is not ready to propose anything to the US Congress on the creation of a CBDC.
❗️The Fed is closely monitoring “stress indicators” in the country’s banking segment.
#JeromePowell #FedDecision