We had 2 jobs and 2 employment reports since last meeting and jobs data revisionsCites Beige BookA good place to start on what’s coming next is the SEPWe will take it meeting by meetingWe’re in the process of re-calibrating our policy stance, that will take place over timeThere is nothing in the SEP that suggests the Committee is in a rushWe can go quicker, slower or pause if appropriateOur base case is to remove restriction and see how the economy reacts to thatWe had a good discussion on 25 vs 50 bps. There was broad support for 50 bpsAll 19 Fed officials saw at least 50 bps this year in the SEPRepeats ‘we’re going to take it meeting by meeting’We made a good, strong start to this and that’s a sign of our confidence that inflation is coming back to targetWe’re going to make our decisions as we goThe labor market is in solid condition and our intention is to keep it there. You can say the same thing about the whole economyWe think this is timely, we don’t think we’re behindYou can take this as a sign that we want to be aheadI don’t think anyone should look at this and say ‘this is the new pace’We’re not hearing about rising layoffs from companies and not seeing that”The time to support the labor market is when it’s strong” Futher declines in job openings will translate more directly into unemploymentThe US economy is in a good place and our decision today is designed to keep it thereWe’re not declaring ‘mission accomplished’ on inflation but we’re encouragedWe will get down to 2% inflation and ultimately we will get what we need out of housing services as wellWe might have cut rates in July if we got the jobs data sooner
Powell repeatedly said or hinted that the SEP pace (two more 25 bps cuts) is the base case and they will adjust around that. There was some dollar buying when he said “I don’t think anyone should look at this and say ‘this is the new pace'”
This article was written by Adam Button at www.forexlive.com.
