US: Fed Chair Press Conference

Highlights

Fed Chair Jerome Powell reiterated that the US economy is showing solid growth with the labor market at a zero balance of low hiring and reduced labor supply while progress in price stability toward the Fed's 2 percent objective is elusive. Powell noted that loss of immigrant labor has resulted in reshaping the job market while productivity gains are keeping growth moderate. Price inflation for nonhousing services is frustratingly slow to improve while housing inflation has come down steadily but is still elevated. Commodities prices had been on the decline but food and energy costs are on the rise again.

For the moment, the tension in the dual mandate for maximum employment and price stability is more-or-less in balance and the fed funds target rate range within reach of its longer-run forecast of 3.1 percent. Powell said the FOMC majority sees no change in rates at present as appropriate.

Powell was asked about the updates to the FOMC's quarterly forecasts in the summary of economic projections. Powell joked, If we were ever going to skip an SEP, this would be a good one. Powell was addressing the uncertainties associated with the war on Iran and the effect on oil prices. He said that uncertainties abound and it is as yet unknown how long the conflict will last or its impact on oil prices in the near future. He said, It is too soon to know scope and duration price pressures from oil.

Powell added, the FOMC is well-positioned to adjust rate based on incoming economic data in the six weeks until the April 28-29 FOMC meeting.

Powell is approaching the end of his term as Chair in mid-May. Should there be no successor nominated and confirmed by then, Powell said he will serve as Chair Pro Tem which is what the law calls for. He added that he has no intention to leave the Board until the investigation into the cost overruns in building renovations is well and truly over. He said that he has not made a decision as yet as to whether he will serve out the remainder of his terms as governor which runs through January 31, 2028. Powell said he will base that decision on what is best for the institution and the people it serves.

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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