Federal Reserve Chairman Powell:
Federal Reserve Chairman Powell: Isolated banking problems can threaten the banking system if not addressed.
All depositors’ savings are safe.
We will use all the necessary tools.
Inflation is still high, we are strongly committed to returning inflation to the 2% target.
The labor market is very tight.
An economy without low inflation doesn’t work for anyone.
Policymakers generally expect weak growth to continue.
Labor demand continues to outstrip supply, but we expect it to balance out over time.
Inflation remains well above our long-term target.
Consumer spending appears to have picked up this quarter, although some of that was weather-related.
Long-term expectations appear to be well established by various measures.
Based on the total data, decisions will be made from session to session.
Bank events lead to tighter credit conditions, which is why we removed the “ongoing” tightening line.
We will carefully monitor the data received, and the actual and expected effects of tighter credit conditions.
Continuation of Powell’s comments: In principle, bank pressure can be considered equivalent to an increase in interest rates.
The need for further increases will be based on the actual and expected effects of the credit crunch.
A possible tightening in credit conditions may mean that monetary tightening has less work to do.
Our statement sought to reflect the uncertainty in the outlook for banking pressures.
Banking pressures are very new, there are many uncertainties.
Rate hikes are well communicated, many banks are able to handle this.
Yes, deflation is absolutely happening.
Further interest rate hikes will be based primarily on the actual and expected effects of the credit crunch.
The banking sector is an important factor.
Credit crunch offsets higher rates due to banking pressures.
Interest rate reduction this year is not the basis of our expectations.
If we need to raise interest rates more than we previously expected, we will do so.
If the Fed needs to raise interest rates, it will. Currently, the Federal Reserve sees the possibility of a credit crunch, which could affect the macroeconomy.
As for the balance sheet, recent liquidity provision has increased the balance sheet, but its purpose and impact are different from QE.
The recent liquidity provisions are not intended to change the stance of monetary policy.
There is still a path to a soft landing and we are working to find it.
It is too early to tell if the recent effects will change the chances of a soft landing.
We have not talked about changing the implementation of the balance sheet.
Financial conditions appear to have tightened, probably more so than traditional indicators suggest.
Our first task is to see if this tightening is sustained, rate cuts are not our main concern.
In testimony to lawmakers, US Treasury Secretary Yellen said the Treasury does not plan to insure all uninsured bank deposits, a statement that weighed on risk sentiment.