US: Fed Chair Press Conference

Highlights

Fed Chair Jerome Powell's briefing highlights the solid performance of the US economy against the backdrop of the dual mandate. Powell declined to say that the risks to price stability and maximum employment are roughly balanced. Rather, he noted that, The upside risks to inflation and the downside risks to employment still exist, while not making a judgment about how one is more of a risk than the other.

Powell said inflation remains somewhat elevated with the most recent core PCE deflator running at a pace of up 3.0 percent from a year ago and still noticeably above the Fed's 2 percent objective. Powell said that most of the impact of tariffs on goods prices have probably been felt, but the process is not yet complete. He noted that disinflation of services prices continues. Overall, once tariffs have passed through to consumers, overall disinflation should resume.

Powell indicated that interpreting the current conditions in the labor market are challenging. Hiring in the private sector remains modestly positive. The combined decline in demand for labor and reduced size of the labor force in part from losses of immigrant workers suggest that the labor market is relatively stable with an unemployment rate that remains in the mid-4 percent range.

Taken together, the data for inflation and the labor market leave the FOMC well-positioned to respond to any changes in the economy and with time to be cautious about adjusting rates. Powell said the current fed funds target rate range of 3.50 to 3.75 percent is within a range of plausible estimates of neutral. He said the FOMC can let the data light the way for us.

Powell was asked a number of questions regarding his intentions as his term as Chair nears its end in May. Powell merely said, I have nothing for you on that today. He declined to answer questions about the US dollar and financial markets as improper for the Fed to weigh in on. He also said he would not respond to or comment on statements from public figures as inconsistent with what is appropriate for an independent central bank to speak about. Powell did strongly defend the need for central bank independence which is present in advanced economies and serves the public well.

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.

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