Fed Chairman Jay Powell, in a highly anticipated prepared speech before the Economic Club of New York this afternoon, indicated progress on the inflation front and a willingness to proceed carefully going forward. Powell pointed out that core inflation over the past three and six months is now below 3%, while cautioning that the path lower may be bumpy. He noted that the decline in inflation, so far, has not come at the cost of higher unemployment, which he considers a welcome development.

Powell went on to say that GDP growth will likely be very strong in the third quarter, but is expected to cool off in the fourth quarter and in 2024. The Fed Chairman believes this cooling is necessary in order for the committee to achieve its 2% inflation goal.

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