After the FED leaves interest rates constant, Chairman Jerome Powell reads the text he prepared in advance on live broadcast and answers journalists' questions.
Here are the important highlights from Powell's press conference:
- The policy has moved into restrictive territory.
- The path forward is unclear.
- Inflation has decreased but is still very high.
- We are fully committed to returning inflation to 2%.
- We have tightened monetary policy significantly.
- We will base our future decisions on data integrity, the changing landscape, and looming risks.
- The full effects of the tightening are probably not yet felt.
- Growth in economic activities has slowed significantly.
- Nominal growth in wages appears to be slowing.
- High interest rates also put pressure on businesses' fixed investments.
- The labor market remains tight but is coming into better balance.
- The committee expects the softening in the labor market to continue.
- The low inflation figures in recent months are pleasing.
- We estimate that core inflation increased by 3.1% in the 12-month period ending in November.
- We predict that it will take some time for inflation to reach 2%.
- While we believe our policy rate is likely near its peak for this cycle, we have encountered surprises in the past.
- We are ready to tighten the policy further if appropriate.
- We will keep policy restrictive until we are confident that we are on the path to 2% inflation.
- Policy makers do not want to take the possibility of further interest rate hikes off the table.
- No one is declaring victory, we are acting carefully. Policymakers are thinking and talking about when it would be appropriate to cut interest rates. We are seeing strong growth that appears to be moderate, and inflation that is making real progress.
- FED discussed the timing of interest rate cuts at today's meeting.
- There is little reason to think that the economy is in recession now, but there is always the possibility that it will be in recession next year.
- I've always thought that there was a possibility that the economy would emerge from recession as inflation fell, and that's what we're seeing so far. However, this result is not guaranteed.
- Many economic indicators are returning to normal.
- We think we have made enough progress regarding interest rates.
- The expectation would be for real rates to fall as we move forward.
- Above-trend growth may eventually mean we need to raise interest rates again.
- If we have stronger growth, that will be good, but it means it will take longer to get inflation down again.
Powell's speech is over.
As one of the FED's fastest responses to rising inflation, the institution has increased the policy rate by 5.25 points since March 2022, and has kept the policy rate constant since July as the inflation target approaches.
*This is not investment advice.
