Guy LeBas, chief fixed income strategist at Janney, performed the very useful service of annotating the press conference of Federal Reserve Chair Jerome Powell with GIFs from the Simpsons.
Thank you for reading this post, don't forget to subscribe!However, he has a locked account. So MarketWatch has recreated (painfully it should be said) LeBas’s inspiring analysis, clip by clip via Giphy, also using the transcript of the press conference as generated by the Wall Street Journal.
Also read: This former Fed insider has 3 big takeaways from Powell’s press conference
First, there was Powell’s introductory remarks. “We are in a position to proceed carefully in determining the extent of additional policy firming that may be appropriate. Our decisions will be based on our ongoing assessments of the incoming data and the evolving outlook and risks,” said Powell.
Powell: “Since early last year, we have raised our policy rate by 5-1/4 percentage points. We see the current stance of monetary policy as restrictive, putting downward pressure on economic activity, hiring, and inflation. In addition, the economy is facing headwinds from tighter credit conditions for households and businesses.”
Colby Smith of the Financial Times: “What makes the committee inclined to think that the fed-funds rate at this level is not yet sufficiently restrictive, especially when officials are forecasting a slightly more benign inflation outlook for this year?”
Powell: “The fact that we decided to maintain the policy rate at this meeting doesn’t mean that we’ve decided that we have or have not at this time reached that stance of monetary policy that we’re seeking.”
Rachel Siegel of the Washington Post: “How would you characterize the debate around another hike or holding steady?”
Powell: “So the proposal at the meeting was to—was to maintain our current policy stance, and I think there was, obviously, unanimous support for that.”
(LeBas, for the record, used a different Simpsons GIF here of people with pots on their heads running into each other, that this author could not locate.)
Steve Liesman of CNBC: “What is it saying about the committee’s view of the inflation dynamic in the economy that you achieve the same forecast inflation rate for next year, but need another half a point of the funds rate on it?”
Powell: “Rather than pointing to a sense of inflation having become more persistent … it’s more about stronger economic activity, I would say.”
Nick Timiraos of The Wall Street Journal: “Can you explain what would constitute enough evidence that will allow the FOMC to normalize the nominal stance of policy while keeping real policy settings sufficiently restrictive?”
Powell: “You know sufficiently restrictive only when you see it. It’s not something you can arrive at with confidence in a model or in various estimates.”
Jeanna Smialek of the New York Times: “In the last press conference you said something to the effect of, you know, it’s a full year out, those discussions. And people interpreted that to mean that you didn’t see a possibility of a rate cut in the first half of next year. And I wonder if that was what you meant by that or whether—you know, how you’re thinking about that timing.”
Powell: “So when I answer these questions about hypotheticals about cutting, I’m never intending to send a signal about timing. I’m just answering them as the question is expressed.”
Craig Torres from Bloomberg News: “I was a little surprised, Chair Powell, to hear you say that a soft landing is not a primary objective.”
Powell: “To begin, a soft landing is a primary objective. And I did not say otherwise. I mean, that’s what we’ve been trying to achieve for all this time.”
Chris Rugaber at Associated Press: “When you look at the disinflation that has taken place so far, do you see it mostly as a result of what some economists are calling the low-hanging fruit, such as the unwinding of supply chain snarls and other pandemic disruptions?”
Powell: “We knew that bringing inflation back down was going to take, as I call it, the unwinding of these distortions to both supply and demand that happened because of the pandemic and the response.”
Michael McKee from Bloomberg Television and Radio: “Given all the known unknowns that you face, how much confidence do you have, can investors have, or the American people have, in your forecasts?”
Powell: “Forecasting is very difficult. Forecasters are a humble lot with much to be humble about.”
U.S. stock futures
ES00,
were lower Thursday, after the S&P 500
SPX
closed 0.9% lower on Wednesday.
“D’oh!”
