the daily chartist

FOMC Press Conference recap

published 1 year ago

 The press conference ended. Here are the highlights of Powell's statement:

  • US economy is doing very well
  • Now sees 4th hike in 2018 as more likely
  • Fed to hold press conferences after every meeting from January 2019
  • The Fed Central tendencies will remain on an quarterly basis
  • Recent inflation data have been encouraging but too soon to declare victory
  • Recent rising oil prices will likely push inflation above 2% over next few months but should be transitory
  • Fed expects to make further gradual increases in interest rates
  • Over the next year or so interest rates will move close to neutral levels
  • The FOMC rate forecast 2.38% at end of 2018, 3.13% in 2019 and 3.38% in 2020
  • Balance sheet reduction is proceeding smoothly
  • Fed to hold press conferences every month starting from January 2019

 The following answers from the Q&A section:

  • Nothing has happened since March to change his view on inflation
  • FOMC continues to think they are just about at 2% goal but wanted to be sustainable
  • FOMC generally believes fiscal policy will provide meaningful support to demand over the next 3 years
  • Fed is strongly committed to 2% inflation target, barriers to changing that very high
  • Economy has strengthened since we began for guidance
  • Now was an appropriate time to remove forward guidance
  • Fed contacts report concerns on US trade policy are rising
  • Right now we don't see any impact on trade policy in any data
  • Today is another sign US economy is in great shape
  • FOMC see fiscal policy moves as supporting demand
  • Slow pace of wage gains a bit of a puzzle
  • Fed keep open mind, will monitor data
  • No one really knows for certainty what is the natural rate of unemployment
  • Uncertainty is why we have been gradually raising rates
  • there is no sense in Feds models that inflation will move significantly higher if unemployment rate falls further
  • we won't overreact to inflation being above 2%
  • FOMC sees financial vulnerabilities as moderate
  • Feds patience in hiking rates has borne fruit 
  • Rates will soon be neutral - assuming we stay on this path of gradual rate rises. We are getting there but not there yet.
  • When interest rates approaches neutral it would no longer be appropriate to keep accommodative language in policy statement
  • great environment for people to find jobs
  • The yield curve is flattening in response to the Fed tightenings.