Powell: Dramatic reduction in labor supply affecting job market

POWELL: WE'VE MOVED 150 BASIS POINTS, NOW IN RANGE WHERE MANY ESTIMATES OF NEUTRAL RATE LIVE POWELL: SOME PEOPLE ON COMMITTEE FEEL IT'S TIME TO TAKE A STEP BACK FED’S POWELL: SOME MEMBERS OF THE COMMITTEE BELIEVE IT’S TIME TO TAKE A STEP BACK; NOTES LABOR MARKET IS A MORE RELIABLE INDICATOR THAN SPENDING, WHICH IS CURRENTLY SHOWING A MORE DOWNBEAT SIGNAL *POWELL: GROWING CHORUS FEELS LIKE MAYBE FED SHOULD WAIT A CYCLE FED’S POWELL: YOU SAW THAT SENTIMENT IN SEPTEMBER AND IN RECENT REMARKS, AND CAN EXPECT IT TO BE REFLECTED IN THE MINUTES FROM TODAY’S MEETING

FED’S POWELL: ABSOLUTELY COMMITTED TO BRINGING INFLATION BACK TO 2%; SAYS THE FED’S COMMITMENT IS CREDIBLE AND FIRM POWELL: DON'T THINK WE'LL HAVE A VERY GRANULAR UNDERSTANDING OF ECONOMY WHILE SHUTDOWN IS ON Fed's Powell: Could imagine shutdown could affect December meeting. FED’S POWELL: ACKNOWLEDGES POSSIBILITY OF NEEDING MORE CAUTION IN THE ABSENCE OF DATA, THOUGH NOT COMMITTING TO SLOWING DOWN — SAYS SUCH A SCENARIO IS IMAGINABLE POWELL: MUCH OF THE TIME THE LAYOFFS ARE ABOUT AI; YES IT COULD HAVE IMPLICATIONS FOR JOB CREATION

FED’S POWELL: DOESN’T PLACE MUCH WEIGHT ON NON-MARKET SERVICES DATA; NOTES INFLATION EXCLUDING TARIFF EFFECTS IS NOT FAR FROM THE 2% TARGET FED’S POWELL: ESTIMATES INFLATION MAY BE ABOUT 0.5 TO 0.6 PERCENTAGE POINTS ABOVE TARGET; DOES NOT SEE LABOR MARKET OR INFLATION EXPECTATIONS TIGHTENING IN A WAY THAT WOULD MAKE INFLATION MORE PERSISTENT FED’S POWELL: NOT ASSUMING TARIFF-DRIVEN INFLATION WILL BE ONE-TIME; SAYS FED IS MONITORING DEVELOPMENTS CLOSELY FED’S POWELL: POLICY STANCE IS MODESTLY RESTRICTIVE, WHICH IS CONTRIBUTING TO THE LABOR MARKET’S GRADUAL COOLING POWELL: DATA CENTER INVESTMENTS AND AI IS A BIG DEAL

*POWELL: FED DOESN'T LOOK AT ANY ONE ASSET PRICE, SAY IT'S WRONG *POWELL: IN AGGREGATE, HOUSEHOLDS ARE IN GOOD SHAPE FINANCIALLY FED’S POWELL: DOESN’T SEE EXCESSIVE LEVERAGE IN THE BANKING OR FINANCIAL SYSTEM; DESCRIBES THE SITUATION AS MIXED BUT NOT OVERLY TROUBLING FED’S POWELL: OVERALL ECONOMIC OUTLOOK NOT OVERLY TROUBLING; NOTES INTEREST RATES AREN’T A MAJOR FACTOR IN DATA CENTER INVESTMENT, BUT LOWER RATES WILL MARGINALLY SUPPORT DEMAND AND HIRING FED’S POWELL: UNLIKE THE DOT-COM ERA WHEN MANY WERE JUST IDEAS, TODAY’S COMPANIES HAVE REAL EARNINGS AND PROFITS — THIS IS NOT THE SAME KIND OF BUBBLE FED’S POWELL: CONSUMER SPENDING HAS BEEN A MAJOR SUPPORT FOR THE ECONOMY AND REMAINS A BIG DRIVER OF ACTIVITY; NOTES CONSUMER SPENDING PLAYS A MUCH LARGER ROLE THAN AI IN OVERALL ECONOMIC GROWTH