English
پارسی
Speech
Good afternoon. My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. The economy is strong overall and has made significant progress toward our goals over the past two years. Labor market conditions are solid, and inflation has moved closer to our 2% longer-run goal, though it remains somewhat elevated. In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. We also made the technical decision to slow the pace of decline in the size of our balance sheet. I’ll have more to say about these decisions after briefly reviewing economic developments.
Economic activity continued to expand at a solid pace in the fourth quarter of last year, with GDP rising at 2.3%. Recent indications, however, point to a moderation in consumer spending following the rapid growth seen over the second half of 2024. Surveys of households and businesses point to heightened uncertainty about the economic outlook. It remains to be seen how these developments might affect future spending and investment. In our summary of economic projections, the median participant projects GDP to rise 1.7% this year, somewhat lower than projected in December, and to rise a bit below 2% over the next two years.
In the labor market, conditions remain solid. Payroll job gains averaged 200,000 per month over the past three months. The unemployment rate, at 4.1%, remains low and has held in a narrow range for the past year. The jobs-to-workers gap has held steady for several months. Wages are growing faster than inflation and at a more sustainable pace than earlier in the pandemic recovery. Overall, a wide set of indicators suggest that conditions in the labor market are broadly in balance. The labor market is not a source of significant inflationary pressures. The median projection for the unemployment rate in the Summary of Economic Projections (SCP) is 4.4% at the end of this year and 4.3% over the next two years.
Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2% longer-run goal. Estimates based on the consumer price index and other data indicate that total PCE prices rose 2.5% over the 12 months ending in February, and that excluding the volatile food and energy categories, core PCE prices rose 2.8%. Some near-term measures of inflation expectations have recently moved up. We see this in both market and survey-based measures, and survey respondents, both consumers and businesses, are mentioning tariffs as a driving factor. Beyond the next year or so, however, most measures of longer-term expectations remain consistent with our 2% inflation goal. The median projection in the SCP for total PCE inflation is 2.7% this year and 2.2% next year, a little higher than projected in December. In 2027, the median projection is at our 2% objective.
Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today's meeting, the committee decided to maintain the target range for the federal funds rate at four and a quarter to four and a half percent.
Looking ahead, the new administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy. While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their effects on the economic outlook is high. As we parse the incoming information, we're focused on separating the signal from the noise. As the outlook evolves, as we say in our statement, in considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will assess incoming data, the evolving outlook, and the balance of risks. We do not need to be in a hurry to adjust our policy stance, and we are well-positioned to wait for greater clarity in our SEP FOMC meeting.
Participants wrote down their individual assessments of an appropriate path for the federal funds rate based on what each participant judges to be the most likely scenario going forward, an admittedly challenging exercise at this time in light of considerable uncertainty. The median participant projects that the appropriate level of the federal funds rate will be 3.9% at the end of this year and 3.4% at the end of next year, unchanged from December. While these individual forecasts are always subject to uncertainty, as I noted, uncertainty today is unusually elevated, and of course, these projections are not a committee plan or a decision. Policy is not on a preset course. As the economy evolves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals. If the economy remains strong and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly. Our current policy stance is well-positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.
At today's meeting, we also decided to slow the pace of decline in our balance sheet. Since we began balance sheet runoff, our securities holdings have declined by more than $2 trillion. While market indicators continue to suggest that the quantity of reserves remains abundant, we have seen some signs of increased tightness in money markets. Beginning in April, the monthly cap on Treasury redemptions will be lowered from $25 billion to $5 billion, consistent with the committee's intention to hold primarily Treasury securities in the longer run. We are leaving the cap on agency securities unchanged. This action has no implications for our intended stance of monetary policy and should not affect the size of our balance sheet over the medium term.
The committee also continued its discussions as part of our five-year review of our monetary policy framework. At this meeting, we focused on labor market dynamics and our maximum employment goal. As we have indicated, our review will include outreach and public events involving a wide range of parties, including Fed listens events around the country and a research conference in May. Throughout this process, we will be open to new ideas and critical feedback, and we will take on board lessons of the last five years in determining our findings. We intend to wrap up the review by late summer.
The Fed has been assigned two goals for monetary policy: maximum employment and stable prices. We remain committed to supporting maximum employment, bringing inflation sustainably to our 2% goal, and keeping longer-term inflation expectations well-anchored. Our success in delivering on these goals matters to all Americans. We understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals.
Thank you I will look forward to your questions.
Q&A
Howard Schneider with Reuters: Thanks for your time. So, two things on the real side here—inflation and then GDP. How much of the higher inflation forecast for this year is due to tariffs? And since the policy path remains the same, are you effectively reading this as a one-time price level shock? Okay, so how much of it is tariffs?
J. Powell: So let me say that it is going to be very difficult to have a precise assessment of how much inflation is coming from tariffs and from other sources. That’s already the case. You may have seen that goods’ inflation moved up significantly in the first two months of the year. Trying to track that back to actual tariff increases—given what was tariffed and what was not—is very challenging. So, some of it—the answer is clearly some of it—a good part of it is coming from tariffs. But we’ll be working, and so will other forecasters, to try to find the best possible way to separate non-tariff inflation from tariff inflation.
In terms of your ‘looking through’ question, it's too soon to say about that. As I’ve mentioned, it can be the case that it's appropriate sometimes to look through inflation if it's going to go away quickly without action by us—if it's transitory. And that can be the case in the case of tariff inflation. I think that would depend on the tariff inflation moving through fairly quickly and it would depend critically as well on inflation expectations being well anchored—longer-term inflation expectations being well anchored.
Howard Schneider: Well, I guess I’m looking at the out years here, and the fact that the policy path doesn’t change at all, and inflation is unchanged in the out years. Doesn’t that imply you all have basically decided that there is no signal here and that it's just going to—we’re back to transitory again?
J. Powell: So, I think that’s kind of the base case. But as I said, we really can’t know that. We’re going to have to see how things actually work out. And the fact that there wasn’t much change—I think that’s partly because you see weaker growth but higher inflation, they kind of offset. And also, frankly, a little bit of inertia when it comes to changing something in this highly uncertain environment. You know, I think there is a level of inertia where you just say, ‘Maybe I’ll stay where I am.’
Coleby Smith with the New York Times: You just described inflation expectations as well anchored. But has your confidence in that assessment changed at all given the increase in certain measures and the high degree of uncertainty expressed by businesses, households, and forecasters?
J. Powell: So, on inflation expectations, of course, we do monitor inflation expectations very, very carefully—basically every source we can find. You know, short-term, long-term, households, businesses, forecasters, market based. And I think the picture broadly is this: You do see increases widely in short-term inflation expectations. And people who fill out surveys and answer questionnaires are pointing to tariffs about that. If you look in the survey world, if you look a little further out, you really don’t see much in the way of an increase. Longer-term inflation expectations are mostly well anchored. If you look at the New York Fed, for example, then you have market-based expectations, and it’s the same pattern. People in markets are pricing in break-evens, some higher inflation over the next year, likely related to tariffs—we know from the surveys. But if you look five years or the five-year, five-year forward, you’ll see that break-events are either flat or actually slightly down in the case of the longer-term one. So, we look at that, and we will watch all of it very, very carefully. We do not take anything for granted. It’s at the very heart of our framework—anchored inflation expectations. But that’s what you see right now.
Coleby Smith: And how much weight do you put on the deterioration in consumer confidence surveys? You said recently that this is perhaps not the best indication of future spending, but I’m curious what you think is behind this deterioration and to what extent it could be a leading indicator for hard data.
J. Powell: So, let’s start with the hard data. We do see pretty solid hard data still. Growth looks like it's maybe moderating a bit, consumer spending moderating a bit, but still at a solid pace. Unemployment is 4.1%, job creation most recently has been at a healthy level, inflation has started to move now we think partly in response to tariffs. And there may be a delay in further progress over the course of this year. So that’s the hard data—overall, it’s a solid picture.
The survey data—both household and business—show a significant rise in uncertainty and significant concerns about downside risk. So, how do we think about that? That is the question. As I mentioned the other day, as you pointed out, the relationship between survey data and actual economic activity hasn’t been very tight. There have been plenty of times where people are saying very downbeat things about the economy and then going out and buying a new car. But we don’t know that that will be the case here. We will be watching very carefully for signs of weakness in the real data, of course, we will. But, given where we are, we think our policy is in a good place to react to what comes. And we think that the right thing to do is to wait here for greater clarity about what the economy is doing.
Nick Timiraos with the Wall Street Journal: Chair Powell, Chair Greenspan once defined price stability as an environment in which inflation is so low and stable over time that it doesn’t materially enter into the decisions of households and firms. Can you say today that we have that price stability—that households and businesses are pricing growth? When you see big changes in inventories and surveys that show consumers, at least in the short run, expect higher inflation?
J. Powell: So, I do like that definition a lot. In fact, I used it at the recent conference where I spoke. I think a world where people can make their daily economic decisions and businesses can operate without having to think about the possibility of significantly high inflation—that is price stability. I think we were getting closer and closer to that. I wouldn’t say we were at that, though. Inflation was running around 2.5% for some time. I do think with the arrival of tariff inflation, further progress may be delayed. The SEP doesn’t really show further downward progress on inflation this year, and that’s really due to the tariffs coming in. So, progress is delayed. But if you look at our forecasts, we do see ourselves getting back into the low twos in 2026 and then down to 2% by 2027. Of course, it’s highly uncertain. So, I see progress that has been made toward that and then progress in the future. I think that progress is probably delayed for the time being.
Nick Timiraos: If that’s the case, why are there cuts in the SEP for 2025?
J. Powell: So again, people wrote down two cuts the last time. They looked at the numbers. They wrote down a meaningful decline in growth from 2.1% to 1.7% in 2025—a slight uptick in the unemployment rate, but not much there. However, core inflation is up by 0.3 percentage points. So, those two factors kind of balance each other out. Not everybody, but on balance, people wrote down similar numbers. The changes aren’t that big.
The other factor, though, as I mentioned, is just really high uncertainty. What would you write down? It’s just really hard to know how this is going to work out. Again, we think our policy is in a good place—where we can move in the direction we need to. But in the meantime, it’s really appropriate to wait for further clarity. And, of course, the costs of doing that, given that the economy is still solid, are very low.
Edward Lawrence with Fox Business. So, with a near 4% unemployment rate, that should be low enough to bring people in from the sidelines in terms of hiring, but we're seeing the hiring rates have been stuck at 2023-2024 levels. So what's going on there?
Chairman: Yeah, so, that's a feature of—has been for some time—a feature of this labor market. You have pretty high participation accounting for aging. You've got wages that are consistent with 2% inflation, assuming that we're going to keep getting relatively high productivity. We've got unemployment pretty close to its natural level, but the hiring rate is quite low. However, so is the layoff rate. If you look at initial claims or layoffs, you're not seeing people losing their jobs, but you're seeing that people who don't have a job are having to wait longer and longer. And, you know, the question is, which way does that break? If we were to see a meaningful increase in layoffs, then that would probably translate fairly quickly into unemployment because it's not a big hiring market. We've been watching that, and it's just not in the data. It hasn't happened. What we've had is a low-firing, low-hiring situation, and it seems to be in balance now for, you know, the last six, seven, eight months. That's where we are. There's healthy levels of job creation too. So overall, it's a labor market that's in balance, and we watch it very carefully.
Edward: So then, have we seen the administration—the new administration's policies—reflected in the economic numbers yet? And when do you anticipate that happening?
Chairman: In labor or in other areas?
Edward: In labor, inflation, just across the economy. Have we started to see the new policies take effect in the numbers?
Chairman: You know, only in a kind of early way. I mean, it's only been a few months, right? For example, the layoffs that are happening here are certainly meaningful to the people involved, and they may be meaningful to a particular neighborhood or region, but at the national level, they're not significant yet. But we don't know how far that will go, we'll find out much more. I mentioned that we've had two very strong goods inflation readings in the last two months, which is very unexpected. I think it's hard to trace it to specific tariffs, but it must have something to do with—it's either noise, and it'll come back, and that’s very possible too, but if it is persistent, then it must be due to people buying ahead of tariffs or raising prices ahead of tariffs. Those kinds of things happen, and they're very hard to capture because so much of it is indirect.
A great example is washing machines. They were tariffed in the last round of tariffs, and prices went up, but prices also went up on dryers, which were not tariffed. The manufacturers just kind of followed the crowd and raised prices. So, things happen very indirectly, and there will be a lot of work done in the coming months to try to trace all that through. But ultimately, though, it's too soon to be seeing significant effects in economic data.
Craig Torres (Bloomberg News): Thanks, Chair. You said transitory price increases from tariffs are the base case. Transitory is the base case—wasn't it the base case last time? Didn't the FOMC forecast lower inflation ahead last time, and wasn't the lesson that it quickly got into services—haircuts, daycare, everything else? So, I'm just wondering why the nine aren't taking that on board and are cutting twice this year.
Jerome Powell: When you say "last time," are you talking about the last pandemic? Because you could have been referring to the last time there were tariffs, in which case inflation was transitory. We are well aware of that, and it's still the truth. If there is an inflationary impulse that is going to go away on its own, it is not the right policy to tighten. By the time tightening takes effect, you are, in effect, lowering economic activity and employment unnecessarily.
Real-time judgments are difficult, and we are well aware of what happened with pandemic inflation. But we must look at this as a different situation. There are differences and similarities. It's a different time—we haven't fully reestablished price stability yet, and we must keep that in mind. Businesses are reluctant to raise prices, but at the same time, many intend to pass these prices through. It is difficult to predict how this will unfold.
Steve Liesman (CNBC): Thanks for taking my question, Mr. Chairman. The Bank of Canada, in its last policy statement, said, "Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation." Does that reflect your own sense of prioritization—faced with higher prices and weaker growth—that the primary goal is still to contain inflation?
Jerome Powell: We have two goals: maximum employment and price stability. Sometimes they are in tension, and our consensus statement outlines how we approach that situation. We assess how far each measure is from its goal and estimate how long it might take to return to that goal. Then, we make a judgment, as our tools only work in one direction—we either tighten or loosen policy. It is a challenging situation, but I would say we do not currently face that dilemma. The economy is not in that situation, and mainstream forecasts do not indicate significant problems.
Steve Liesman (CNBC) Follow-up: Yesterday, the UCLA Anderson forecast suggested a high probability of a recession. Do you believe the current slowdown raises the risk of a recession?
Jerome Powell: There is always an unconditional probability of a recession—historically, about one in four within a 12-month period. The question is whether current conditions elevate that probability. We do not forecast a recession, and while some forecasters have slightly raised their recession probabilities, they remain within moderate levels. Just two months ago, expectations of a recession were extremely low. While the risk has increased, it is still not high.
Chris Rugaber (Associated Press): Last night, President Trump fired two members of the Federal Trade Commission, an independent agency. This could lead to a legal fight over the administration’s authority to remove independent officials. If these firings stand, does that pose a threat to the Fed’s independence? Could he do the same to the Fed Board?
Jerome Powell: I answered that question in this room previously, and I have no desire to change my answer today. I have nothing new to add on that matter.
Chris Rugaber (Associated Press) Follow-up: I’d like to ask about consumer sentiment, particularly inflation expectations in the University of Michigan survey. In the summer of 2022, you cited rising long-term inflation expectations in that index as a reason for a 0.75% rate hike. Now, you’ve discussed various inflation measures, but you don’t seem to be placing the same weight on that index. Are you dismissing last week’s University of Michigan data, or does it still carry the same importance?
Jerome Powell: I mentioned that index back then, but I did not place a huge weight on it. That was an ex-post explanation rather than a decisive factor. Additionally, the reading you’re referring to was preliminary—so is the current one. The University of Michigan’s long-term inflation expectations index is an outlier compared to market-based and other survey-based assessments. We do not dismiss data that we don’t like—we force ourselves to consider all data. However, we recognize that this particular measure stands apart from others. Nonetheless, we take notice of it.
Michael McKee (Bloomberg Radio & Television): There’s a concern on Wall Street that by studying the net effects of fiscal policies on the economy, we might wait too long and fall behind in responding to a downturn. How can you reassure people that the Fed will spot a problem early enough, or will you decide to be preemptive?
Chair Powell: We are fully aware of the evolving situation and the timeframes involved. We will use all the tools at our disposal to achieve our goals as effectively as possible, and we aim to be timely in doing so. For now, the data we are seeing is solid. While we recognize the softer sentiment data and high uncertainty, we are closely monitoring these factors. We believe it’s wise to wait for further clarity before adjusting our policy stance.
Michael McKee: Do you think it will be difficult to gain clarity in a government environment driven by tweets? Do you foresee a time when you’ll have a reliable forecast to trust?
Chair Powell: Yes, I believe we will gain clarity, though it’s hard to say when that will be. Decisions will be made and implemented, and once that happens, we’ll be able to assess their impact on the economy. Many of these decisions will unfold over the coming months, and we’ll adapt as we go along.
Rachel Siegel (Washington Post): Earlier, you mentioned separating the signal from the noise—distinguishing between tariff-driven inflation and non-tariff inflation. Can you walk us through how you’ve made these distinctions, particularly since the January meeting?
Chair Powell: When we talk about separating the signal from the noise, we mean that there is a lot of uncertainty. News about tariffs being applied or removed can be misleading, as it doesn't always provide useful information. Our focus is on identifying what will affect economic activity, inflation, employment, and other key areas.
For example, the first two months of this year saw high readings for goods inflation after a period of nearly zero readings. This could be attributed to tariffs, but it’s difficult to definitively prove that tariffs alone caused the increases. It’s often a mix of factors, including temporary or idiosyncratic changes, which may reverse over time. We’ll know more in a couple of months. Understanding the full impact of tariffs on inflation will be challenging, but we are making progress and will continue to analyze these issues.
Rachel Siegel: Do you have a sense of what would move something from being noise to a signal?
Chair Powell: It would depend on the specific case. We’re looking for direct evidence that certain inflationary pressures are or are not caused by tariffs. For example, if inflation in a sector like housing services is rising independently of tariffs, we’d see that as a clearer signal. Housing services’ inflation, which was a problem for a while, is now showing signs of improvement, while goods and non-housing services inflation are more concerning at the moment.
Kelly O'Grady (CBS News): Consumer sentiment has dropped significantly, but you say the economy is still solid based on hard data. What is your message to consumers who don't feel that strength, particularly those struggling with rising grocery bills?
Chair Powell: Consumer dissatisfaction stems primarily from past inflation, particularly from 2021 to 2023, when prices increased significantly. People are paying higher prices now, which can make them feel dissatisfied, even though the economy itself is growing. Inflation is no longer as high as it was during that period, and unemployment is at a relatively low 4.1%. But the frustration with price levels remains, and we understand that.
Kelly O'Grady: Why are you still projecting two rate cuts this year if inflation is expected to remain higher for longer? Does this suggest that a slowdown in economic growth is a real concern?
Chair Powell: We began the year with a projection of two rate cuts, which reflected weaker growth expectations but higher inflation. These factors are somewhat offsetting each other. Unemployment is still very low, and growth is steady, so the forecast hasn’t changed significantly. The situation is highly uncertain, and we’re in close contact with businesses and households across the country to monitor sentiment. While sentiment has weakened, economic activity remains solid, so we are carefully watching developments. The price level remains a key concern for consumers, which may be influencing sentiment, but the overall economy appears healthy for now.
Victoria from Politico: I wanted to ask, first of all, if you could clarify your point about how tariffs played a role in the uptick in the inflation forecast. Specifically, is this referring to the tariffs that have already been implemented, or does it anticipate some of the tariffs expected on April 2nd? Also, could you elaborate on the balance sheet decision? What influenced that decision? Did it have anything to do with expectations about how raising the debt ceiling might affect reserve supply?
Chair Powell: In the Summary of Economic Projections (SEP), you'll see that there's no further progress expected on core inflation this year. It’s pretty much flatlining, moving sideways. We don’t explicitly break down how much of this is due to tariffs, but we know tariffs are impacting inflation forecasts. Tariffs are already affecting both core PCE inflation and core CPI inflation this year, and all forecasters have accounted for this. I can't quantify the exact impact, but it's certainly part of the inflation outlook.
Regarding the balance sheet, we began thinking about it due to the flows in and out of the Treasury General Account (TGA). As we discussed it further, we realized that now was a good time to take action. The committee came to the conclusion that we should continue with the approach we adopted back in June when we slowed the pace of quantitative tightening (QT). Essentially, we're reducing the pace of QT by about half, which means it will take longer to reach our goal. We expect this slower pace to be beneficial, and it’s a move that was widely supported.
We still believe that reserves are abundant, although some indicators are starting to react. However, with the TGA emptying out, reserves have increased, making it harder to see the underlying signals clearly. Still, we believe that this decision has no implications for monetary policy or the ultimate size of the balance sheet. It's consistent with our published plans, and it doesn't send any hidden signals. We're just making adjustments based on practical considerations.
Claire Jones from Financial Times: In January, you mentioned that inflation expectations remained well-anchored. Do you still believe that is the case today? If inflation expectations are not well-anchored, why hasn’t there been a more significant shift in policy?
Chair Powell: When we talk about inflation expectations being well-anchored, we’re referring to longer-term expectations, such as those five years out. These have remained relatively stable, with no significant changes. There is one measure that's slightly higher, but other surveys and market-based readings show inflation expectations are still well-anchored. Short-term inflation expectations may fluctuate due to various factors, such as tariffs, but our focus is on the longer-term outlook, and there hasn't been a major shift in those expectations.
Neil Irwin from Axios: Treasury Secretary Yellen has pointed out that a significant portion of job growth in recent years has come from government or government-adjacent sectors like healthcare and education. Do you agree that there's underlying weakness in private job growth? And do you see this shift in job composition as having policy implications?
Chair Powell: Yes, this trend has been evident over the past year. There were periods when job creation was concentrated in sectors like healthcare, education, and government, while private sector job growth was more modest. However, private sector job growth has been within a healthy range overall. It’s important to remember that we have very low unemployment, so overall, it’s a strong labor market. From a policy perspective, employment is employment, regardless of the sector. The government can have policies that address these shifts, but our role is to monitor the overall labor market situation.
Matt with CNN Thank you, Chair Powell. The Fed's statement released today removed the line that previously stated the committee judges the risks to achieving its employment and inflation goals to be roughly in balance. Can you explain the decision to remove that line? Does it mean you're now more concerned about inflation or employment?
Chair Powell: Actually, it doesn't mean either of those things. Sometimes language serves its purpose and then we remove it. That's what happened here. The line about the balance of risks was useful as we approached liftoff, but now we're past that stage, so it was no longer necessary. More importantly, if you look at pages 10, 11, and 12 of the Summary of Economic Projections (SEP), participants broadly raised their estimates of uncertainty and risks to growth and our employment and inflation goals. That’s a more significant point now than whether the risks are in balance.
Jennifer from Yahoo Finance: As the Fed navigates higher inflation and lower growth, the Fed has referenced lessons from the 1970s. Is the Fed willing to accept a recession to break the back of inflation?
Chair Powell: Fortunately, we're not in a situation like the 1970s. Inflation has come down from higher levels to near 2%, while unemployment remains consistent with full employment at 4.1%. The economy has managed inflation at around 2.5% with 2% growth and 4% unemployment. So, I don’t see a repeat of the 1970s. Underlying inflation remains in the 2% range, with some inflationary pressures related to tariffs, but I don’t think we're in a comparable situation.
Daniel from AFP: You mentioned that tariffs are impacting inflation. How is the Fed thinking about the possibility of retaliatory tariffs, especially with the April 2 deadline approaching?
Chair Powell: From the beginning, we’ve considered a range of outcomes from tariffs and trade policy, including full retaliation. These possibilities are reflected in our forecasts. We’re prepared for both retaliation and non-retaliation scenarios. Once specifics are clearer, we’ll update our forecasts with better information, but for now, we’re anticipating some uncertainty.
Jean from MNI Market News: Chair Powell, regarding the balance sheet change, the minutes initially described slowing quantitative tightening (QT) as temporary until the debt ceiling is resolved. But based on your comments, it sounds like there’s no desire to return to the previous pace of QT after the debt ceiling issue is resolved. Is that correct?
Chair Powell: Yes, that’s right. We discussed pausing and slowing QT, but there was a strong consensus for slowing rather than pausing for a variety of reasons. This adjustment will slow the process and extend it, essentially doubling the timeframe for QT. It aligns with our principles and plans, ensuring a smoother path as we approach the desired outcome. It’s not about monetary policy or the size of the balance sheet; it’s about making a sensible adjustment to the pace as we near our goal. We believe this approach is well-supported and will help us achieve our objectives more confidently.
Comments