Highlights
The unfolding of future rate cuts was not Jerome Powell's point of emphasis in his opening remarks, rather he stressed the necessity of keeping monetary policy restrictive until officials are confident that inflation is returning to the bank's 2 percent goal. Despite"welcome" cooling, Powell warned that inflation is"still too high", that continued price moderation is"not assured", and that officials"will need to see further evidence" of improvement. He said members of the policy committee don't expect to raise rates further but are"not ready" to take this possibility"off the table".
In the question and answer session, Powell was asked about the change in wording in the FOMC meeting statement. He said that specifically prefacing"any" to"additional policy firming that may be appropriate" is an acknowledgment that rates are"likely at or near peak for this cycle". He acknowledged that more rate hikes in this cycle are less probable, but that cautious policymakers would be watching the data closely.
As for possible rate decreases, Powell said that as the FOMC"is seeing what they've been wanting to see, rate decreases begin to come into view". Rate decreases are in preliminary discussion over the policy horizon, and"the general expectation that this will be a topic for us going ahead", Powell said.
In looking at the December summary of economic projections (SEP), Powell took a moment to reiterate that the contents of the forecasts are"not a decision or plan". He noted that some FOMC participants took the opportunity to update their submissions to the SEP in light of the week's November CPI and PPI dats.
With the forecasts in mind, Powell said,"There is little basis for thinking economy in a recession now,", but added that"there is always a possbility that there will be a recession in the coming year". Powell did not dismiss recession but does not see one in the projections. He said,"We will set policy according to the numbers we actually see". He was positive on the outlook for further improvements in the inflation as restrictive monetary policy does its work. He noted that inflation improvements have been broadly based. Powell said,"all three are now contributing" for goods, and housing and non-housing services.
Powell said the FOMC is"not talking about altering the pace of QT" and that the size of the balance sheet continues to decline at a"brisk pace".
In the question and answer session, Powell was asked about the change in wording in the FOMC meeting statement. He said that specifically prefacing"any" to"additional policy firming that may be appropriate" is an acknowledgment that rates are"likely at or near peak for this cycle". He acknowledged that more rate hikes in this cycle are less probable, but that cautious policymakers would be watching the data closely.
As for possible rate decreases, Powell said that as the FOMC"is seeing what they've been wanting to see, rate decreases begin to come into view". Rate decreases are in preliminary discussion over the policy horizon, and"the general expectation that this will be a topic for us going ahead", Powell said.
In looking at the December summary of economic projections (SEP), Powell took a moment to reiterate that the contents of the forecasts are"not a decision or plan". He noted that some FOMC participants took the opportunity to update their submissions to the SEP in light of the week's November CPI and PPI dats.
With the forecasts in mind, Powell said,"There is little basis for thinking economy in a recession now,", but added that"there is always a possbility that there will be a recession in the coming year". Powell did not dismiss recession but does not see one in the projections. He said,"We will set policy according to the numbers we actually see". He was positive on the outlook for further improvements in the inflation as restrictive monetary policy does its work. He noted that inflation improvements have been broadly based. Powell said,"all three are now contributing" for goods, and housing and non-housing services.
Powell said the FOMC is"not talking about altering the pace of QT" and that the size of the balance sheet continues to decline at a"brisk pace".
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.
