Fed’s Powell: Hard Data Holds Solid for Now

Federal Reserve Chairman Jerome Powell justified keeping the policy rate at 4.25%-4.50% after the March meeting, elaborating in the post-meeting press conference.

Key Highlights from the Fed’s Press Conference

The economy is performing strongly.

Labor market conditions remain stable and balanced, not fueling inflation.

Inflation is somewhat elevated, with PCE prices likely up 2.5% and core PCE at 2.8% in December.

The Fed slowed its balance sheet reduction as a technical adjustment.

Consumer spending shows signs of moderating.

Surveys reflect heightened uncertainty, amplified by the new administration’s significant policy shifts.

Short-term inflation expectations have risen due to tariffs, though longer-term expectations align with the 2% goal.

Goods inflation has increased, but tying it to tariffs is tricky; more clarity is expected in a couple of months.

Housing services inflation is declining favorably.

Unemployment has held steady over the past year.

Money markets are showing some tightness.

Policy remains adaptable: restraint can persist if the economy stays strong, or easing is possible if the labor market weakens.

The Fed is well-positioned to wait for clarity amid unusually high uncertainty, avoiding hasty moves.

Tariffs may explain some flatlining in core inflation projections, but their net economic impact is uncertain.

Progress toward price stability was underway before recent disruptions.

Sentiment has dipped partly due to policy changes.

For now, solid hard data supports a cautious approach, separating signal from noise.