A series of benign reads on price growth in the US added incrementally to the Fed’s confidence in the disinflation trajectory, Jerome Powell said Monday, during a superfluous Q&A with David Rubenstein at the Economic Club of Washington.
When I say “superfluous” I’m not just feigning irritation for the sake of it. The Fed over-communicates. I haven’t heard a convincing argument yet for the frequency of Fed communications in the modern era.
It’s a ludicrous stretch to suggest anything’s gained in terms of transparency from scheduling and booking policymakers for multiple speaking engagements every single week. The public isn’t any more informed about the machinations of US monetary policy as a result, and there’s a very good case for the contention that all the attendant headline hockey fosters confusion in markets at least as often as it does clarity.
One wonders, sometimes, if the only purpose of these TV cameos and fireside chats is to give these people something to do — and the financial media something to write about.
In any case, Powell said Monday he didn’t want to send any “signals” about the timing of the first Fed cut. And he didn’t. Unless you count his acknowledgement that the last three CPI releases looked “pretty good” compared to a succession of worrying updates in Q1.
He stuck to the script on the labor market. It’s coming into better balance and any material slowdown could elicit a Fed response, which is just code for cuts in the event of a negative NFP print.
As for the economy more generally, a hard landing “certainly” isn’t the base case. Policy’s restrictive, but not “severely” so. Powell conceded that the neutral rate’s probably higher than it was pre-pandemic, sounded the usual warning on fiscal policy (i.e., it’s “unsustainable”) and said he intends to serve out his full second term as Chair regardless of who’s president.
Commenting briefly on Saturday’s events, he said political violence doesn’t have a place in American society. “A man died,” he noted, adding that he’s “grateful” Trump’s injuries weren’t more serious.
Oh, and in case you were wondering, Powell likes to swim. And ride bikes. He goes to the gym as often as he can. He’s just like you! Only with about $100 million in the bank.
