Maybe we’ll get through without a recession.
Federal Reserve Chairman Jerome Powell said the Fed is no longer forecasting a recession given the latest economic data showing the resilience of the U.S. economy.
“The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession,” Powell said Wednesday during a press conference following the Federal Open Market Committee meeting.
The Fed raised its interest rate target on Wednesday to a range of 5.25 percent to 5.5 percent, the highest rate in decades. This was the eleventh rate hike since March 2022.
“Looking ahead, we will continue to take a data-dependent approach in determining the extent of additional policy firming that may be appropriate,” Powell said at the press conference.
The official statement from the Fed sent the same message.
“The committee will continue to assess additional information and its implications for monetary policy,” the central bank said. “In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
Powell said that the Fed is determining policy step-by-step.
“We’re going to be going meeting-by-meeting,” Powell said.
While today’s presser definitely gives hope to the “soft landing” and “immaculate disinflation” crowd, they might not want to crack open the bubbly just yet.
Powell did caution that “the process of getting inflation back down to two percent has a long way to go.”
As we noted on our friend Larry Kudlow’s Fox Business show yesterday, if the Fed does have to hike again due to a resurgence of inflation, it will cause a real disruption for the market which is not expecting it.
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