[arawde]

Most surprising part of this FOMC had to be when Powell said "we would like to slow demand" during the press conference, you don't usually hear the quiet part out loud like that from this Fed chair. Also shift upwards in PCE in the SEP, plus the dots, all seems appropriately hawkish

[dragonwriter]

> Most surprising part of this FOMC had to be when Powell said "we would like to slow demand" during the press conference, you don't usually hear the quiet part out loud like that from this Fed chair.

That's...not really a “quiet part”, it's the widely acknowledge, overt nature of managing inflation. That the Fed’s dual mandate involves employment and price stability, and that those are in tension because controlling inflation often involves mitigating demand, while promoting employment enhances demand is not viewed as a secret. It’s like Fed 101, and Fed board members (chair or not) very often do not walk on eggshells about it.

[mullingitover]

The quiet part would be "We need to put a few million people out of work to cool things off."

[mywittyname]

It's the reason that the Fed is nominally non-political.

Nobody wants the medicine, even if they need it.

[xenadu02]

This is the first time labor has been making real gains compared to productivity in a long time. I don't think it's surprising that capital would prefer to layoff a few million plebs to remind the rabble where they stand.

[goodluckchuck]

Monetary policy is always political.

[civilized]

> you don't usually hear the quiet part out loud like that from this Fed chair

Is it implying / could be construed in some negative way? Like, "slow demand" means "poor people need to buy less", or something?

[Ericson2314]

Yes, the only way raising these rates could reduce demand is by increasing unemployment.

Powell is much more honest than his predecessors in this regard. I commend him for it.

The obsession with this single policy lever is bad, and I hope it changes. But there being little political will to raise rates is a good first step.

Eventually we can leave them at zero, and manage the economy by other means.

[mywittyname]

> Powell is much more honest than his predecessors in this regard.

I disagree pretty heavily here. Yellen was always honest about the need for monetary policy which would be politically unsavory (which is why her term wasn't renewed). Her delivery was very much designed not to "spook the markets" but I think part of the reason she scared the markets was that she favored long-term stability.

Her words as Treasury Secretary aren't exactly sugar coating things. She's been saying that the impact of the Russian sanctions are going to hurt American as well, and that inflation is probably here to stay in the medium term at least (she's long held the belief that high inflation is an acceptable tradeoff for low unemployment). Granted, those statements are followed up with "we are working on a solution"-type statements, but I don't see many promises.

[lghh]

> Yes, the only way raising these rates could reduce demand is by increasing unemployment.

It could also reduce demand by making it more expensive to buy things. Sure, that will probably have a side-effect of increasing unemployment, but that unemployment isn't the goal. The goal is to make it cost more to do things so less people want to do them.

[civilized]

I wonder why we'd want to pull levers to make things cost more, when the goal is to fight inflation, the bad phenomenon in which things cost more.

[hellojesus]

Increased costs lead to decreased demand, which ultimately will dampen further price increases. They're shifting the intersection of supply and demand.

[Ericson2314]

So then inflation will defeat itself by its own, per your reasoning.

The actual truth is to the extent raising interest rates does anything at all to prices, it is via reducing employment.