Pre-QA comments from chair Powell:
- Fed is squarely focused on dual mandate
- Fed has covered a lot of ground, full of facts have yet to be felt
- We can proceed carefully
- Our decisions will be based on assessments of data and risks
- Growths in real GDP has come in above expectations
- Consumer spending particularly robust
- Activity and housing has picked up
- Higher rates weighing on business investment
- Labor market remains tight.
- Labor supply and demand continue to comment to better balance
- Labor demand still exceeds supply
- Expects labor market rebalancing to continue, easing upward pressure on inflation
- Inflation remains well above our long-run goal of 2%
- Getting inflation down to 2% has a long way to go
- Longer term inflation expectations appear to be well anchored
- Strongly committed to return inflation to 2%
- Current stance of policy is restrictive, putting downward pressure on economic activity, employment and inflation
- We are committed to achieving and sustaining sufficiently restrictive policy to bring inflation down to 2% over time
- Federal Reserve will make decisions meeting by meeting. Federal Reserve is mindful of the uncertainties
- The Fed is prepared to raise rates further if appropriate
- Will keep rates restrictive until confident inflation moving down to 2%
- Reducing inflation is likely to require a period of below trend growth, some softening of labor conditions
- We will do everything we can to achieve goals
- Restoring price stability is essential in reaching maximum growth potential
Q&A portion has begun at 2:39 PM. Below is a snapshot of the Forex rates, the major US indices, and the US yield curve.
- The fact that we decide to keep policy rates where it is does not mean we have decided we have or have not reached the stance of policy we are seeking
- The majority of policymakers believe it is more likely than not that another rate hike will be appropriate
- Fed wants to see convincing evidence that we have reached the appropriate level
- Real interest rates are meaningfully positive
- Recent labor market report was a good example of what we want to see
- People want to be careful not to jump to a conclusion one way or the other
- As a group, it’s a pretty tight cluster around end of year rate review
- We are fairly close we think to where we want to get
- I would attribute huge importance to one hike
- We need to get to a place where we are confident we can bring inflation down to 2% over time
- Stronger economic activity is the main reason for needing to do more with rates.
- In terms of neutral Ray, you only know when you get there.
- It may be that the neutral rate has risen.
- The median of the neutral rate estimate hasn’t risen, but people are moving their estimates.
- It is plausible that the neutral rate is higher than the longer-run rate.
- It is possible neutral rate at this moment is higher.
- It is a good thing we’ve seen meaningful rebalancing and labor market without much increase in unemployment.
- I still think and broadly people still think, there will need to be some softening in the labor market.
- I still think there will need to be some softening in labor market
- In the median forecast don’t see a big increase in unemployment, but that is not guaranteed
- Would not call soft landing a baseline expectations
- On soft landing, have always thought there was a path to it
- It is also possible if the path to soft landing will has widened, it may be decided by factors outside our control.
- The fact we’ve come this far lets us proceed carefully.
- You know sufficiently restrictive only when you see it. It is not something you can arrive at with confidence in a model.
- Confidence comes from seeing enough data, so that, for now, we can decide it’s the right level
- For now the question is to try to find a level where we can stay there. We haven’t gotten to the point of confidence yet.
- The decision we make at the last two meetings this year will depend on the totality of the data
- The time will come at some point that it’s appropriate to cut, but not saying when.
- Part of decision to cut may be that real rates are rising because inflation is coming down
- There is so much uncertainty. In the moment we will do what makes sense.
- Consumer spending has been driving GDP. Consumer has been very robust and spending
- however GDP is not a mandate. The question will be “Is the heat we see in GDP really a threat to ability to get to 2% inflation?”
- Strike, government shutdown, resumption of the student loan payments, higher long-term rates are among risks
- On UAW strike, it could affect output, hiring and inflation depending on length of strike
- Government shutdowns don’t traditionally have much of a macro effect
- Energy prices being higher is a significant thing. Higher energy prices sustained can affect inflation, and spending.
- The economy appears to have significant momentum.
- We do have this collection of risks to economy