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US: Fed Chair Press Conference
Highlights
After the policy statement dropped forward guidance, New Fed Chair Kevin Warsh explained during his first press conference that forward guidance is not the business we should be in.
The FOMC left the fed funds target rate range unchanged at 3.50 to 3.75 percent. The vote was 12-0 in favor of maintaining the fed funds target rate range, the four-paragraph statement showed.
He said the Committee believed the labor market was"stable", although the statement did not comment on the full-employment side of the Fed's dual mandate. It just stated that"job gains have kept pace with the workforce, and the unemployment rate has changed little."
On inflation, Warsh said it has been running well ahead of the 2 percent target for the past five years. He stressed that the FOMC will deliver unambiguously and unanimously on price stability.
The quarterly summary of economic projections (SEP) showed the forecasts for inflation as measured by the PCE deflator were revised up significantly for 2026 to 3.6 percent from 2.7 percent.
Warsh did not submit economic projections but he said he encouraged his colleagues to do so. He added he would not be surprised to see changes to this aspect of the Fed communications. He noted he is"encouraged" by the approach to the FOMC statement, which was just four paragraphs long, and which he qualified as simpler and shorter.
Warsh announced five task forces, including about the Fed communications and the Fed inflation framework, which is worthy of a fresh look.
The taks forces focus on Fed communications, on the Fed balance sheet, on the use and reliance on existing data sources, on productivity and jobs, and on the inflation framework.
On press conferences, Warsh was not clear about his committment, saying they provide a useful way to communicate with households, but having something important to say matters.
On data sources, he said they rely on old fashioned methods that don't have response rates"that we need". He is open minded about modernization, including better real-time data, while underlining the role of financial markets as a source of information.
Warsh expects the task forces to begin in couple of weeks. We could hear from them starting in Fall , with recommendations possible at the end of the year.
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.