“I do not think the U.S. is currently in a recession. And the reason is, there are just too many areas of the economy, performing too well. I would point to the labor market in particular,” Powell said at a press conference following the Fed’s decision.

Debate on Wall Street over whether the U.S. is in a recession has been raging ever since first-quarter gross domestic product (GDP) contracted. One common technical definition of a recession involves two consecutive quarters of declining GDP, and the Atlanta Federal Reserve’s GDP tracker currently estimates that U.S. GDP sank 1.2% in the second quarter. 

The true GDP data won’t come out until tomorrow, but even if it does show a contraction in GDP for the second consecutive quarter, Powell said he doesn’t view that as a sign of a U.S. recession.

“Generally the GDP numbers do have a tendency to be revised pretty significantly,” he said. “You tend to take first GDP reports with a grain of salt.”

He argued that the strong labor market is a sign that the U.S. is far from entering a true economic downturn. 

“2.7 million people hired in the first half of the year, it doesn’t make sense that the economy would be in recession,” he said.

Powell added that the Fed will likely slow the pace of its interest-rate increases over the coming months, noting that the size of future rate hikes will be based on incoming economic data.

He also said that the Fed won’t be providing as much guidance on the path of future rate increases moving forward, arguing that it makes more sense to use a “meeting-by-meeting” basis.

Jay Hatfield, CEO of Infrastructure Capital Advisors, said Powell’s comments were “slightly dovish” and helped to support a rally in tech stocks that started this morning.

However, Hatfield noted that Powell “recognized that the economy is softening while the job market remains strong.”