Highlights
Even at 2.7 percent on the PCE price index and at 2.8 percent for the ex-food ex-energy core, inflation remains"far too high" according to Jerome Powell in his opening remarks. Powell noted that May's consumer price data released earlier today are also well above the Federal Reserve's inflation goal, at 3.3 percent overall and 3.4 percent for the core. Powell repeated that the Fed is"committed" to its two percent goal and that restoring price stability is"essential" for the achievement of maximum employment.
The Fed chair is upbeat on the labor market, saying demand for labor and the availability of labor are coming into"better balance" as the supply of workers increase and the pace of immigration remains"strong". He said nominal wage growth has"eased" over the past year and noted that average payroll growth continues to exceed 200,000 per month and that the unemployment rate, though ticking slightly higher, remains"low" at 4.0 percent."Relatively tight but not overheated" is how Powell describes the labor market, saying it is now roughly in line with conditions prior to the pandemic.
On the economy in general, he said activity continues to expand at a"solid pace" and that consumer spending, though slowing from last year's robust pace, remains"solid". Powell further noted that business investment has improved.
Powell doesn't expect the Fed to cut rates until officials have"greater confidence" that inflation is moving sustainably toward their two percent goal. He said policy is well positioned to pursuing both sides of its policy mandate (steady inflation and maximum employment) and that the FOMC will maintain the current level of rates"as long as appropriate".
In the Q&A, Powell emphasized that the policy outlook will be determined by the totality of the economic data, not any one indicator. He said there was nothing"mechanical" in how the FOMC would set rates at future meetings. There is no particular target for where the PCE deflator or CPI should reach, or the unemployment rate, or movements in housing costs. He added that policymakers are not looking at one or two, or even three months of data as a definitive period that would benchmark how the FOMC assessed the data. Powell reiterated that the FOMC will take a balanced approach and that decisions remain on a meeting-by-meeting basis.
Powell also noted that the FOMC is"well aware of the two-sided risks here." He explained that"if we wait too long" it could come at the cost of growth, while"if we move too quickly it could undo the good that we've done" in making progress on inflation. However, at the moment solid economic growth and the healthy labor market at present give the FOMC"the ability now to approach this question carefully".
The Fed chair is upbeat on the labor market, saying demand for labor and the availability of labor are coming into"better balance" as the supply of workers increase and the pace of immigration remains"strong". He said nominal wage growth has"eased" over the past year and noted that average payroll growth continues to exceed 200,000 per month and that the unemployment rate, though ticking slightly higher, remains"low" at 4.0 percent."Relatively tight but not overheated" is how Powell describes the labor market, saying it is now roughly in line with conditions prior to the pandemic.
On the economy in general, he said activity continues to expand at a"solid pace" and that consumer spending, though slowing from last year's robust pace, remains"solid". Powell further noted that business investment has improved.
Powell doesn't expect the Fed to cut rates until officials have"greater confidence" that inflation is moving sustainably toward their two percent goal. He said policy is well positioned to pursuing both sides of its policy mandate (steady inflation and maximum employment) and that the FOMC will maintain the current level of rates"as long as appropriate".
In the Q&A, Powell emphasized that the policy outlook will be determined by the totality of the economic data, not any one indicator. He said there was nothing"mechanical" in how the FOMC would set rates at future meetings. There is no particular target for where the PCE deflator or CPI should reach, or the unemployment rate, or movements in housing costs. He added that policymakers are not looking at one or two, or even three months of data as a definitive period that would benchmark how the FOMC assessed the data. Powell reiterated that the FOMC will take a balanced approach and that decisions remain on a meeting-by-meeting basis.
Powell also noted that the FOMC is"well aware of the two-sided risks here." He explained that"if we wait too long" it could come at the cost of growth, while"if we move too quickly it could undo the good that we've done" in making progress on inflation. However, at the moment solid economic growth and the healthy labor market at present give the FOMC"the ability now to approach this question carefully".
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.
