Powell’s Closing

“Let’s sum up this review of economic conditions that we think we need to see to bring inflation down to 2%.
• Growth in economic activity has slowed to well below its longer-run trend, and this needs to be sustained.
• Bottlenecks in goods production are easing and goods price inflation appears to be easing as well, and this, too, must continue.
• Housing services inflation will probably keep rising well into next year, but if inflation on new leases continues to fall, we will likely see housing services inflation begin to fall later next year.
• Finally, the labor market, which is especially important for inflation in core services ex housing, shows only tentative signs of rebalancing, and wage growth remains well above levels that would be consistent with 2 percent inflation over time.

“Despite some promising developments, we have a long way to go in restoring price stability,” Powell said.

Auto companies in our view need to demonstrate a degree of flexibility and speed of analysis and reaction that – much like the Covid Pandemic and Putin’s war against Ukraine – were not part of the usual operating procedures.