Powell emphasized the Fed's focus on labor data amid economic uncertainties, particularly concerning trade deals. He indicated that if jobless claims rise towards 323,000, the Fed might respond quickly. The need for a careful balance between labor and inflation data is critical, with Powell admitting the Fed acted late in cutting rates in 2024. He reaffirmed that current economic conditions are stable but highlighted the potential for rapid action should signs of labor market deterioration appear, especially considering unique inflation dynamics compared to previous crises.
The Fed will act swiftly again once they can visually see the labor market breaking, as they're modestly restrictive today with their policy.
If the jobless claims data approaches 323,000, the Fed may act more swiftly than anticipated, as evidenced by today's meeting.
The labor market had stabilized before the trade war started and the economy was on solid footing for the first few months of the year.
Without an excessive rise in rent and oil prices, it is difficult for overall inflation to spiral out of control.
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