Press conference exchange between HOWARD SCHNEIDER and Fed Chair Jerome Powell:

user: Hi, Howard Schneider with Reuters, and thanks as usual. So I just wanted to connect a couple of dots here. The statement made a number of changes that seem to be saying things are getting better. You’re saying inflation has eased That’s new. You’ve taken out references to the war in Ukraine that’s causing price increases. You’ve taken out references to the pandemic. You’ve eliminated all the reasons that you said prices were being driven higher, yet that’s not mapping to any change in how you describe policy. We still have ongoing increases to come. So I’m wondering, why is that the case? And does it have more to do with uncertainty around the outlook or more to do with you not wanting to give a very overeager market a reason to get ahead of itself and overreact?

assistant: So I guess I would say it this way. We can now say, I think, for the first time that the disinflationary process has started. We can see that. And we see it, really, in goods prices so far. Goods prices is a big sector. We—this is what we thought would happen since the very beginning, and now here it is actually happening, and for the reasons we thought. We—you know, it’s supply chains, it’s shortages, and it’s demand revolving back towards services. So this is a good thing. This is a good thing. But that’s, you know, around a quarter of the PCE price index—core PCE price index. So the second sector is housing services, and that’s driven by very different things. And we—as I mentioned, with housing services, we expect, and other forecasters expect, that measured inflation will continue moving up for several months but will then come down, assuming that rent increases associated with new leases continue to be soft. And we do assume that. So we think ’s in the pipeline. And we actually see disinflation in the goods sector, and we see it in the pipeline for two sectors that amount to a little less than half. So this is good. And we note that when we say inflation is coming down that this is good. We expect to see disinflation process will be seen, we hope soon, in the core goods ex. housing—sorry, the core services ex. housing sector that I talked about. We don’t see it yet. It’s—you know, it’s seven or eight different kinds of services, not all of them are the same. And, you know, we have a sense of what’s going on in each of those different subsections. Probably the biggest part of it, probably 60 percent of that is, you know, research would show is sensitive to slack in the economy and so the labor market will probably be important. Some of the other ones it’s—the labor market is not going to be important. Many other factors will drive it. In any case, we don’t see disinflation in that sector yet. And I think we need to see that it’s the majority of the core PCE index, which is the thing that we think is the best predictor of headline PCE, which is the price series that we associate with our mandate. So it’s not that we’re not—we’re neither optimistic nor pessimistic. We’re just telling you that we don’t see inflation moving down yet in that large sector. I think we will fairly soon, but we don’t see it yet. Until we do, I think we—you know, we see ourselves, we’ve got to be honest with ourselves, but we see ourselves as having perhaps more persistent—we’ll see more persistent inflation in that sector, which will take longer to get down. And we’re just going to have to—we have to complete the job. You know, that’s what we’re here for.