Highlights
"Data-dependent approach" leaves open the question of what the Federal Reserve's next move will be. Jerome Powell, in his opening statement, said it"will take time" for the full effects of the Fed's run of rate hikes to be felt, the assessment of when and how much these effects are biting together with economic and financial developments will be the central factors the Fed will weigh at its next meeting on September 19-20.
Powell repeated that inflation still has"a long way to go" before returning to the Fed's 2 percent target. Conceding only that inflation has"moderated somewhat", the Fed chair listed the PCE price indexes (last at 3.8 percent in May with ex-food ex-energy core at 4.6 percent) as the well the CPI, the latter having fallen in data for June to 3.0 percent, down nearly 2 percentage points since April in a decline that perhaps belies Powell's guarded assessment. He repeated that inflation expectations remain anchored.
The Fed Chair noted that consumer spending"has slowed" from earlier in the year though housing has"picked up"; he said high interest rates and slower output growth are weighing on fixed investment. He also repeated lines from this afternoon's statement: economic growth is"moderate", tighter credit conditions will weigh on activity, jobs gains are"robust". Citing improvement in the labor participation rate, an easing in job vacancies, and signs of cooling in nominal wage growth, Powell said supply and demand are coming into better balance in the jobs market.
Perhaps the most interesting response in the question and answer session was that the Fed staff forecast no longer anticipates a recession this year. Powell said,"A soft landing is a long way from assured," but he continues to see a path to achieving it with a resilient US economy consistently performing above expectations. However, consistent modest-to-moderate growth does not mean that monetary policy is going to be less restrictive any time soon.
Powell said,"Today's rate hike was appropriate" to address persistent elevated inflation at the core level. Fed policymakers have seen the data moving in the right direction, but not close enough to the 2 percent inflation target, and not for long enough. He said,"The pieces of the puzzle are coming together", however,"policy has not been restrictive enough for long enough to bring inflation down". He added,"The process still has a long way to go."
Several questions focused on whether the FOMC is now going to an every-other meeting rate hike. Powell was clear that a data-dependent FOMC will decide based on the most current information available, and not based on a pattern. Powell said that the current situation does not lend itself to providing much in the way of forward guidance. He said that in the eight weeks"between now and the September meeting" there are many important pieces of data on the calendar including two more employment reports, two more CPI reports, and"lots of activity data"."Careful assessments" about monetary policy will be made meeting-by-meeting, Powell said.
Powell repeated that inflation still has"a long way to go" before returning to the Fed's 2 percent target. Conceding only that inflation has"moderated somewhat", the Fed chair listed the PCE price indexes (last at 3.8 percent in May with ex-food ex-energy core at 4.6 percent) as the well the CPI, the latter having fallen in data for June to 3.0 percent, down nearly 2 percentage points since April in a decline that perhaps belies Powell's guarded assessment. He repeated that inflation expectations remain anchored.
The Fed Chair noted that consumer spending"has slowed" from earlier in the year though housing has"picked up"; he said high interest rates and slower output growth are weighing on fixed investment. He also repeated lines from this afternoon's statement: economic growth is"moderate", tighter credit conditions will weigh on activity, jobs gains are"robust". Citing improvement in the labor participation rate, an easing in job vacancies, and signs of cooling in nominal wage growth, Powell said supply and demand are coming into better balance in the jobs market.
Perhaps the most interesting response in the question and answer session was that the Fed staff forecast no longer anticipates a recession this year. Powell said,"A soft landing is a long way from assured," but he continues to see a path to achieving it with a resilient US economy consistently performing above expectations. However, consistent modest-to-moderate growth does not mean that monetary policy is going to be less restrictive any time soon.
Powell said,"Today's rate hike was appropriate" to address persistent elevated inflation at the core level. Fed policymakers have seen the data moving in the right direction, but not close enough to the 2 percent inflation target, and not for long enough. He said,"The pieces of the puzzle are coming together", however,"policy has not been restrictive enough for long enough to bring inflation down". He added,"The process still has a long way to go."
Several questions focused on whether the FOMC is now going to an every-other meeting rate hike. Powell was clear that a data-dependent FOMC will decide based on the most current information available, and not based on a pattern. Powell said that the current situation does not lend itself to providing much in the way of forward guidance. He said that in the eight weeks"between now and the September meeting" there are many important pieces of data on the calendar including two more employment reports, two more CPI reports, and"lots of activity data"."Careful assessments" about monetary policy will be made meeting-by-meeting, Powell said.
Definition
The Fed announced in 2011 that then Fed Chair Ben Bernanke would hold press briefings four times a year to explain the FOMC's latest quarterly economic projections. The purpose of the briefings is to provide additional context for the FOMC's policy decisions and to allow for questions-and-answers with the press. According to the Fed, the"introduction of regular press briefings is intended to further enhance the clarity and timeliness of the Federal Reserve's monetary policy communication." The press briefing is held at 2:30 p.m. ET on the days of FOMC statements in which quarterly projections are released. Beginning in 2019, the briefing will be held after each FOMC meeting. The policy statement is released at 2:00 p.m. ET after the conclusion of every FOMC meeting regardless of whether there are forecasts or not.
Description
The Fed’s meeting statement and economic projections can move financial markets. However, the Fed’s meeting statement — which indicates any changes in monetary policy—typically is very concise and lacking in detail. However, the Fed now releases its economic forecasts four times a year. As of March 20, 2013, the forecasts are released at the same time as the FOMC statement during the months of March, June, September, and December. After each of the 8 Fed meetings, the chair holds a press conference to explain the forecasts and other policy issues. The chair’s press conference allows for the financial markets and public in general to learn more about why and how the monetary policy decision was made and to learn more about FOMC views on the direction of the economy—including real growth, inflation, unemployment, expected timing of changes in the fed funds rate, and expected levels of the fed funds rate in the near term.
