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Fed Chair Powell (Q&A) says cannot know the neutral rate with certainty

Fed Chair Powell's remarks suggest that the Fed still sees the neutral rate as uncertain, indicating they might not prioritize aggressive tightening in the near term.

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Fed Chair Powell (Q&A) says cannot know the neutral rate with certainty

Journalist Mallick says "Slowly, gradually and rather at a snails pace, things seem to be moving in a certain direction, for the good that is."

Fed Chair Powell (Q&A) reiterates policy in a good place to move in either direction; no one is calling for a hike now; will depend on how the situation evolves

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  • Says we are in a reasonable range for the neutral rate, the higher end
  • Labour market is still cooling off a little bit
  • No case for policy to be meaningfully restrictive - maybe mildly restrictive or neutral is appropriate
Context

His emphasis on a mildly restrictive stance implies limited immediate rate hikes, which may support the USD in the short-term but leaves the door open for shifts depending on labor market developments.

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