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JPow's "Softish Landing"

Jerome Powell, the Chairman of the Federal Reserve had an interview with The Wall Street Journal, to discuss the state of the economy.

There were a few things that really stood out during the livestreamed interview. The first of which being the idea of a "Softish Landing".

“You’d still have a strong labor market if unemployment were to move up a few ticks,” he said. “I would say there are a number of plausible paths to have a soft as I said softish landing. Our job isn’t to handicap the odds, it’s to try to achieve that.” -source

A "softish landing" is just a nice way of the Fed saying "brace for impact." Of course Powell can't use those words, otherwise the market would crash immediately, but the idea of a "softish landing" comes with its consequences. There is going to a long, tough road to get back to some stability in the future. How long will it take? No idea.

The more alarming piece of the interview was brought up when asked about the interest rate increases. Powell mentioned that he will back interest rate increases until prices start to fall back toward a healthy level.

“If that involves moving past broadly understood levels of neutral we won’t hesitate to do that,” -source

At the Senate Banking Committee there was an initial consensus that Powell would not consider moving up from 50bps at the next FOMC. Now this almost seems contradictory to that at this point. Is there a chance that the interest rate increases to 75bps? What is the market going to do leading up to these announcements?

A lot of things are up to interpretation during these interviews and hearings from Powell, but these are all things that everyone knows already. I don't know what people are really hoping to hear from Powell to ease their concerns... and I wish I knew how the market would react so I could make some money. But if trading was that easy, everyone would be doing it.

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