I say this because, all else equal, a significant tightening of credit conditions could obviate the need for some additional monetary policy tightening, but making such a judgement is difficult, especially in real time.3 Regarding the economic outlook, the data in hand for the first quarter of 2023 continue to surprise me, with stronger growth and job creation than I expected late last year.
The FOMC has significantly raised the target range for the federal funds rate to dampen aggregate demand, but U.S. consumers and businesses are showing remarkable resilience.