Powell speech: Producer Price Index reading was quite mixed

Federal Reserve Chairman Jerome Powell speaks at a moderated discussion with De Nederlandsche Bank (DNB) President Klaas Knot at the Foreign Bankers' Association's Annual General Meeting in Amsterdam.

Key takeaways

"US economy has been performing very well."

"US economy has a very strong labor market."

"Households are in good shape financially."

"Consumer spending, business investment remain strong."

"Still there are labor shortages in many industries."

"Overall, it's a good picture looking at the US economic data so far."

"Labor market is coming back into better balance."

"Labor market is now about as tight as it was before the pandemic."

"Signs of gradual cooling in the labor market with supply and demand getting into better balance."

"Inflation in Q1 was notable for the lack of further progress."

"We did not expect a smooth road on inflation, we have to be patient and let policy do its work."

"We expect continued GDP growth of 2% or better."

"We expect the labor market to continue to rebalance but remain strong."

"We expect inflation to move down back to levels more like last year."

"Confidence in inflation moving back down is lower than it was. My confidence on that is not as high as it was before."

"Producer Price Index reading was quite mixed."

"Firms are still report labor shortages."

"Restrictive policy may take longer than expected to bring inflation down but we will get inflation back to 2%."

"It's a question of keeping policy at the current rate for longer."

"Don't think it's likely that the next move would be a rate hike, more likely that we would hold policy rate where it is."

"Housing inflation has been a bit of a puzzle."

"Current rent increases have been low for some time, not showing up in rollover leases."

"Lags between decline in market rates and it showing up are longer than we thought."

Market reaction

The US Dollar stays under modest bearish pressure following these comments. At the time of press, the US Dollar Index was down 0.2% on the day at 105.00.