Federal-Reserve
Federal Reserve Chair Jerome Powell discusses the Fed's commitment to bringing inflation back down to 2%. This requires maintaining a restrictive policy stance for some time, despite the slowdown in growth. Powell emphasizes the importance of forward-looking measures of inflation and the need to use tools forcefully but thoughtfully. He acknowledges the impact of higher interest rates on the housing market and the labor market, but does not see a case for real softening just yet. Powell also addresses concerns about the global economy and the importance of maintaining public trust in a 2% inflation target. Finally, Powell discusses how fiscal spending and savings among households may influence future policies while reiterating that policy should be more restrictive but ensuring stable prices remains their top priority.
In this section, Chair Powell emphasizes the strong commitment of the Federal Reserve in bringing back inflation to their 2 percent goal. He stresses that price stability is the responsibility of the Fed and serves as a foundation for the economy to work for everyone. He also states that without it, there will be no sustained period of strong labor market conditions. The FOMC has recently raised their policy interest rate, implying that they have the tools and resolve to restore price stability.
In this section, the Chair of the Federal Reserve discusses the recent decision to raise interest rates by 75 basis points, with the aim of returning inflation to 2 percent, which requires maintaining a restrictive policy stance for some time. Despite the slowdown in growth, the labor market remains tight, with the unemployment rate at a 50-year low, job vacancies still high, and wage growth elevated. Inflation remains well above the long-term goal of 2 percent, but longer-term inflation expectations appear to be well anchored. However, the longer high inflation continues, the more likely expectations of higher inflation will become entrenched. The Fed is committed to returning inflation to its 2 percent objective and is closely monitoring the risks that high inflation poses to both sides of its mandate.
In this section, Federal Reserve Chair Powell discussed the ongoing efforts by the Central Bank to bring inflation back down to 2% goal levels. Powell explained that bringing inflation down would require "a sustained period of below-trend growth and some softening of labor market conditions." He added that the Fed would remain focused on this task until the goal was met as well as reaffirming the Fed's commitment to public missions during the Q&A portion of the conference. Powell went on to say that the two most recent reports suggested that the ultimate level of interest rates would be higher than previously expected, which could lead to a slower pace of rate increases, but that the decisions would depend on incoming data.
In this section, Federal Reserve Chair Jerome Powell discusses the need to slow down the pace of interest rate increases, stating that it may come soon, even as early as the next meeting. He emphasizes that it is more important to determine how high the rates should be raised and how long the monetary policy should remain restricted. Powell sees no indication that the current level has gone beyond overtightening. However, they still believe that there is a need for ongoing rate increases and there's still ground to cover. Powell also clarifies the importance of forward-looking measures of inflation, rather than just getting to a rate above inflation rate, and points out that there is still no evidence of inflation becoming entrenched.
In this section, Chair Powell responds to a question regarding the lag effects of monetary policy and how they will impact the economy in the coming months. Powell explains that while the traditional view of "long and variable lags" still holds true, there is uncertainty due to the lack of data on inflation at such high rates in the modern economy. Financial conditions now react sooner in anticipation of monetary policy decisions, and economists are divided on the impact of these changes on the economy. Powell stresses the importance of risk management and the need to use tools forcefully but thoughtfully to control inflation and get it under 2%. He also notes that it's premature to think about pausing the ongoing rate hikes and explains that the clearest impact of tightening so far has been on housing and some venture-funded tech companies.
In this section, Chairman Powell discusses the impact of higher interest rates on the housing market, saying that it needs to get back to a balance between supply and demand after being overheated for a couple of years due to low rates and demand. He also notes that although housing credit was much more carefully managed by lenders this time than before the financial crisis, housing activity is now declining and prices are growing at a faster rate, which could cause problems down the road. Additionally, Chairman Powell looks at the labor market, acknowledging that job openings are very high compared to available workers, but believes it will take time and patience to get inflation down, and that there is currently a mixed picture with wages moving sideways at an elevated level and a shortage of labor supply. Overall, he says that they look at a very broad range of labor market data and don’t see the case for real softening just yet.
In this section of the FOMC press conference, Chair Powell discusses the relationship between wages, inflation, and the labor market. While he acknowledges that wages do have an effect on inflation, he does not see them as the principal reason prices are going up. Powell also addresses concerns about the global economy, acknowledging difficulties in Europe due to high energy prices and slower growth in China. However, he emphasizes the importance of using Fed tools to control inflation and maintain price stability in the US as a long-term benefit for the global economy. While the Fed does not directly affect food and energy prices, Powell notes that their actions help keep inflation expectations anchored and maintain public trust in a 2% inflation target.
In this section of the FOMC press conference, Chair Powell acknowledges the importance of holding policymakers to high ethical standards and avoiding situations that undermine the public's trust. The Fed has taken steps to prevent these issues, including a new investment program and a central group that approves disclosures and trades with a lag of 45 days. As for investigations, Chair Powell did not have an update on pending cases. On the topic of interest rates, Powell notes that the Fed monitors the near-term forward spread and does not believe they have overtightened. Powell maintains that until inflation is brought down, the risk of doing too little still outweighs the risk of doing too much. He asserts that while the Fed wants to avoid overtightening, they have the tools to support economic activity if necessary.
In this section, Chair Powell of the Federal Reserve discussed the impact of rate increases on housing and government inflation measures versus private real-time data. Powell stated that the CPI and PCE measures capture rents for all tenants, which is the right target for monetary policy. Private measures are good at picking up new leases, and there will come a point at which rent inflation will start to come down, which we are well aware of, but it is well out from where we are now. Powell also commented that it is premature to discuss pausing, and the Fed has a commitment to getting this done and not making the mistake of withdrawing their strong policy too soon. Powell emphasizes that they think they have a ways to go before getting to a restrictive level of interest rates.
In this section of the FOMC press conference, Fed Chairman Jerome Powell discusses how the fiscal spending and savings among households counterbalance each other, and while any fiscal headwinds have yet to show themselves, they might influence future policies. Powell also states that the Fed's job requires patience and resolve. Powell believes that it is difficult to predict what the labor market will do, especially as the data is highly unusual. The high job openings and strong labor market have led to a steep Beveridge curve but mean that job losses may be lower than traditional measures suggest. Powell believes the window for a soft landing has narrowed over the past year, but it is hard to say if there will be a recession or how bad it might be. Powell stated that policy should be more restrictive, but ensuring stable prices remains their top priority.
No videos found.
No related videos found.
No music found.