Highlights
Fed Chair Jerome Powell's comments adhered closely to the content of the FOMC statement. He noted that the FOMC focused on the first half of 2025 which sees 1.2 percent growth rather than the quarterly performance of down 0.5 percent in the first quarter and up 3.0 percent in the second quarter. Powell said the overall slower growth in the first half of the year largely reflects a slowdown in consumer spending. The half-year increase has moderated from the up 2.5 percent in the prior comparable period, but the US economy remains in expansion.
For the near future, Powell said, changes to government policy continue to evolve and effect is uncertain and that the FOMC would wait for more data before deciding on future rate actions, if any. He noted that the next meeting on September 16-17 would see two more employment reports in the intermeeting period.
The FOMC will be closely watching the inflation data. Powell said, A reasonable base case is that the effects on inflation could be short-lived but that the FOMC has a responsibility to assess and manage the risks to inflation and prevent a one-time price increase from becoming entrenched. He added, the current policy stance is appropriate to guard against inflation risks. Those risks may take some time to become evident.
As to the impacts of tariffs on prices, Powell said, It is still quite early days. He noted the substantial amount of tariff revenues being collected. Where in the stream the tariffs are being paid is not yet fully clear. Powell said the costs are starting to show up in consumer prices, but the process will probably be slower than we expected at the beginning. He added, There is a long way to go before the effects are fully evident.
In addressing inflation risks, Powell said, We will do what we have to do, … Ideally we do it efficiently through timing changes in monetary policy appropriately. Powell emphasized that no decision about rates have been made prior to the September meeting. At the present time, The economy not performing as if a restrictive policy is holding it back inappropriately, Powell said.
On the dissents in the vote from Governors Michelle Bowman and Christopher Waller, Powell said the FOMC had quite a good meeting and that people thought carefully about this [setting the rate] and put their positions out there. He continued, You want that clear thinking and we certainly had that today. The FOMC statement said the two preferred to lower the target range for the federal funds rate by ¼ percentage point at this meeting. Powell left further elaboration to the two dissenters.
Powell also mentioned that the Fed is making progress in preparing the results of its five-year review of monetary policy and making changes to its statement of longer run goals and monetary policy strategy, He said it should be complete by late summer. The last time the update occurred, some of its conclusions were premiered in Powell's speech at the Kansas City Fed's annual Jackson Hole forum on August 27, 2020.
For the near future, Powell said, changes to government policy continue to evolve and effect is uncertain and that the FOMC would wait for more data before deciding on future rate actions, if any. He noted that the next meeting on September 16-17 would see two more employment reports in the intermeeting period.
The FOMC will be closely watching the inflation data. Powell said, A reasonable base case is that the effects on inflation could be short-lived but that the FOMC has a responsibility to assess and manage the risks to inflation and prevent a one-time price increase from becoming entrenched. He added, the current policy stance is appropriate to guard against inflation risks. Those risks may take some time to become evident.
As to the impacts of tariffs on prices, Powell said, It is still quite early days. He noted the substantial amount of tariff revenues being collected. Where in the stream the tariffs are being paid is not yet fully clear. Powell said the costs are starting to show up in consumer prices, but the process will probably be slower than we expected at the beginning. He added, There is a long way to go before the effects are fully evident.
In addressing inflation risks, Powell said, We will do what we have to do, … Ideally we do it efficiently through timing changes in monetary policy appropriately. Powell emphasized that no decision about rates have been made prior to the September meeting. At the present time, The economy not performing as if a restrictive policy is holding it back inappropriately, Powell said.
On the dissents in the vote from Governors Michelle Bowman and Christopher Waller, Powell said the FOMC had quite a good meeting and that people thought carefully about this [setting the rate] and put their positions out there. He continued, You want that clear thinking and we certainly had that today. The FOMC statement said the two preferred to lower the target range for the federal funds rate by ¼ percentage point at this meeting. Powell left further elaboration to the two dissenters.
Powell also mentioned that the Fed is making progress in preparing the results of its five-year review of monetary policy and making changes to its statement of longer run goals and monetary policy strategy, He said it should be complete by late summer. The last time the update occurred, some of its conclusions were premiered in Powell's speech at the Kansas City Fed's annual Jackson Hole forum on August 27, 2020.
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.
