Highlights
In contrast to the Federal Reserve's second straight decision to keep policy on hold, Jerome Powell took a hawkish tone in his opening statement, underscoring the possible necessity of having to tighten policy further despite signs that price pressures may be cooling."A few months of good data are only the beginning to build confidence that inflation is moving sustainably to our goal," Powell said in his opening statement.
He said the fight against inflation is a"continuing process" and that the Fed is"strongly committed" to keeping policy restrictive until FOMC members are confident that consumer inflation is on a path to the bank's two percent goal (the PCE price index was last at 3.4 percent) . He described growth in labor demand"as resilient" and warned it"could warrant further tightening of monetary policy".
Powell reiterated that the FOMC is"squarely focused" on achieving the dual mandate of maximum employment and stable prices. He acknowledged that the surprising resilience in US economic growth which has been buoyed by consumer spending has helped keep the labor market active. However, he said the FOMC is"proceeding carefully" in further rate hikes. He said,"the full effects of past rate hikes have not yet been felt." Policymakers are heartened by"a few months of good data" on inflation, but that this is"only the beginning" of what is needed to give the FOMC sustained confidence that inflation is returning to target.
Powell was adamant that the FOMC has made no decision about the next steps in monetary for the December 12-13 meeting. He was clear that the question before the FOMC is when and if another rate hike is needed. He said the Committee is not yet looking at rate cuts, adding"We take the economy as it is" in setting monetary policy. Powell said,"The committee will always do what it thinks appropriate at the time."
Powell noted that long-term bond yields have brought about tighter financial conditions. He said persistent tighter financial conditions could affect monetary policy, but"would need to be persistent" and not simply be a reflection of expected policy moves by the FOMC.
Powell mentioned some of the uncertainties on the horizon. He said,"Geopolitical tensions are certainly elevated" and the FOMC is monitoring this. Powell noted the possibility of another government shutdown in November.
He said the fight against inflation is a"continuing process" and that the Fed is"strongly committed" to keeping policy restrictive until FOMC members are confident that consumer inflation is on a path to the bank's two percent goal (the PCE price index was last at 3.4 percent) . He described growth in labor demand"as resilient" and warned it"could warrant further tightening of monetary policy".
Powell reiterated that the FOMC is"squarely focused" on achieving the dual mandate of maximum employment and stable prices. He acknowledged that the surprising resilience in US economic growth which has been buoyed by consumer spending has helped keep the labor market active. However, he said the FOMC is"proceeding carefully" in further rate hikes. He said,"the full effects of past rate hikes have not yet been felt." Policymakers are heartened by"a few months of good data" on inflation, but that this is"only the beginning" of what is needed to give the FOMC sustained confidence that inflation is returning to target.
Powell was adamant that the FOMC has made no decision about the next steps in monetary for the December 12-13 meeting. He was clear that the question before the FOMC is when and if another rate hike is needed. He said the Committee is not yet looking at rate cuts, adding"We take the economy as it is" in setting monetary policy. Powell said,"The committee will always do what it thinks appropriate at the time."
Powell noted that long-term bond yields have brought about tighter financial conditions. He said persistent tighter financial conditions could affect monetary policy, but"would need to be persistent" and not simply be a reflection of expected policy moves by the FOMC.
Powell mentioned some of the uncertainties on the horizon. He said,"Geopolitical tensions are certainly elevated" and the FOMC is monitoring this. Powell noted the possibility of another government shutdown in November.
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.
