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Fed Chair Jerome Powell Dismisses 'Soft Landing' as Fed's Base Expectation for the Economy

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Fed Chair Jerome Powell Rejects Soft Landing as Baseline Expectation

During a Federal Open Market Committee (FOMC) press conference, Federal Reserve Chair Jerome Powell stated that an economic soft landing is not the baseline expectation for the Federal Reserve as it maintains high interest rates. Powell emphasized that the Fed's primary focus is combating high inflation, rather than achieving a slowdown in market growth without a recession.

Soft Landing Not a Baseline Goal

When asked about the possibility of a soft landing, Powell made it clear that it was not the Fed's baseline expectation. While he acknowledged that a soft landing was once considered plausible, he noted that external factors beyond the Fed's control could ultimately determine the outcome.

Caution in Approach

Powell highlighted the importance of proceeding with caution and taking careful steps to restore price stability. He emphasized the Fed's commitment to achieving a sustained period of strong labor market conditions that benefit all, while also acknowledging the need to address inflation and meet the public's expectations.
Challenges in Inflation Target
The Fed continues to face challenges in meeting its 2% inflation target. In August, the inflation rate rose to 3.7% for the year, surpassing the previous year-over-year rate of 3.2% in July. Powell acknowledged the possibility of a soft landing but stressed the need for careful decision-making to restore price stability and achieve desired labor market conditions. In conclusion, Powell's remarks during the FOMC press conference indicate that the Federal Reserve does not consider a soft landing as its baseline expectation. The focus remains on addressing high inflation and restoring price stability, while also striving to achieve strong labor market conditions. The Fed's cautious approach reflects the challenges and uncertainties in the current economic landscape.

Implications for New Businesses

The Federal Reserve's stance on the economic soft landing could have significant implications for new businesses. With the Fed maintaining high interest rates and focusing on combating inflation, new businesses may face challenges in securing loans and managing costs.

Impact on Market Growth

The lack of a baseline expectation for a soft landing suggests that the Fed anticipates potential fluctuations in market growth. This could create an unpredictable business environment, making it harder for new businesses to plan and strategize.
Adapting to Economic Uncertainties
New businesses will need to adapt to these economic uncertainties. They may need to be more cautious in their financial planning and consider various scenarios in their business strategies. In conclusion, the Federal Reserve's stance on the economic soft landing and its focus on combating inflation present both challenges and opportunities for new businesses. While the high interest rates and potential market fluctuations could pose difficulties, they also underscore the importance of adaptability and strategic planning in navigating the business landscape. New businesses that can effectively adapt to these economic conditions may be better positioned to thrive in the long run.
Story First Published at: https://dailycaller.com/2023/09/20/powell-says-soft-landing-not-baseline-expectation/
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