FED Chairman Powell Cuts Rates 50BP: His Words on Why
Samantha: Hello, this is Samantha Shares.
This episode covers the Transcript
of Chair Powellâs Press Conference
Opening Statement September 18, 2024
The following is an audio
version of that transcript.
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and is not legal advice.
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And now Chairman Powellâs
opening statement.
Transcript of Chair Powellâs
Press Conference Opening
Statement September 18, 2024
CHAIR POWELL.
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.
Our economy is strong overall and
has made significant progress toward
our goals over the past two years.
The labor market has cooled from
its formerly overheated state.
Inflation has eased substantially
from a peak of 7 percent to an
estimated 2.2 percent as of August.
We are committed to maintaining our
economyâs strength by supporting
maximum employment and returning
inflation to our 2 percent goal.
Today, the Federal Open Market Committee
decided to reduce the degree of policy
restraint by lowering our policy interest
rate by one half of a percentage point.
This decision reflects our growing
confidence that, with an appropriate
recalibration of our policy stance,
strength in the labor market can
be maintained in a context of
moderate growth and inflation moving
sustainably down to 2 percent.
We also decided to continue to
reduce our securities holdings.
I will have more to say about
monetary policy after briefly
reviewing economic developments.
Recent indicators suggest that
economic activity has continued
to expand at a solid pace.
G D P rose at an annual rate of 2.2
percent in the first half of the year,
and available data point to a roughly
similar pace of growth this quarter.
Growth of consumer spending has
remained resilient, and investment in
equipment and intangibles has picked
up from its anemic pace last year.
In the housing sector, investment
fell back in the second quarter
after rising strongly in the first.
Improving supply conditions have
supported resilient demand and
the strong performance of the U.S.
economy over the past year.
In our Summary of Economic
Projections, Committee participants
generally expect G D P growth to remain
solid, with a median projection of
2 percent over the next few years.
In the labor market, conditions
have continued to cool.
Payroll job gains averaged 116
thousand per month over the past
three months, a notable stepdown from
the pace seen earlier in the year.
The unemployment rate has moved
up but remains low at 4.2 percent.
Nominal wage growth has eased
over the past year and the
jobs-to-workers gap has narrowed.
Overall, a broad set of indicators
suggests that conditions in the
labor market are now less tight than
just before the pandemic in 2019.
The labor market is not a source
of elevated inflationary pressures.
The median projection for the
unemployment rate in the S E P is 4.4
percent at the end of this year, 4
tenths higher than projected in June.
Inflation has eased notably over
the past two years but remains above
our longer-run goal of 2 percent.
Estimates based on the Consumer
Price Index and other data indicate
that total PCE prices rose 2.2
percent over the 12 months ending
in August; and that, excluding the
volatile food and energy categories,
core P C E prices rose 2.7 percent.
Longer-term inflation expectations appear
to remain well anchored, as reflected in
a broad range of surveys of households,
businesses, and forecasters, as well
as measures from financial markets.
The median projection in the S E P for
total P C E inflation is 2.3 percent
this year and 2.1 percent next year,
somewhat lower than projected in June.
Thereafter, the median
projection is 2 percent.
Our monetary policy actions are
guided by our dual mandate to
promote maximum employment and stable
prices for the American people.
For much of the past three years,
inflation ran well above our 2
percent goal, and labor market
conditions were extremely tight.
Our primary focus had been on bringing
down inflation, and appropriately so.
We are acutely aware that high
inflation imposes significant hardship
as it erodes purchasing power,
especially for those least able to
meet the higher costs of essentials
like food, housing, and transportation.
Our restrictive monetary policy has helped
restore the balance between aggregate
supply and demand, easing inflationary
pressures and ensuring that inflation
expectations remain well anchored.
Our patient approach over the past year
has paid dividends: Inflation is now
much closer to our objective, and we have
gained greater confidence that inflation
is moving sustainably toward 2 percent.
As inflation has declined and the labor
market has cooled, the upside risks to
inflation have diminished and the downside
risks to employment have increased.
We now see the risks to achieving our
employment and inflation goals as roughly
in balance, and we are attentive to the
risks to both sides of our dual mandate.
In light of the progress on inflation
and the balance of risks, at todayâs
meeting the Committee decided to
lower the target range for the
federal funds rate by 1/2 percentage
point, to 4-3/4 percent to 5 percent.
This recalibration of our policy stance
will help maintain the strength of the
economy and the labor market and will
continue to enable further progress on
inflation as we begin the process of
moving toward a more neutral stance.
We are not on any preset
course.
We will continue to make our
decisions meeting by meeting.
We know that reducing policy
restraint too quickly could
hinder progress on inflation.
At the same time, reducing restraint
too slowly could unduly weaken
economic activity and employment.
In considering additional adjustments
to the target range for the federal
funds rate, the Committee will carefully
assess incoming data, the evolving
outlook, and the balance of risks.
In our S E P, F O M C 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.
If the economy evolves as expected,
the median participant projects
that the appropriate level of the
federal funds rate will be 4.4
percent at the end of this year
and 3.4 percent at the end of 2025.
These median projections are lower than in
June, consistent with the projections for
lower inflation and higher unemployment,
as well as the changed balance of risks.
These projections, however, are
not a Committee plan or decision.
As the economy evolves, monetary
policy will adjust in order to
best promote our maximum employment
and price stability goals.
If the economy remains solid and
inflation persists, we can dial
back policy restraint more slowly.
If the labor market were to weaken
unexpectedly or inflation were to
fall more quickly than anticipated,
we are prepared to respond.
Policy is well positioned to deal with the
risks and uncertainties that we face in
pursuing both sides of our dual mandate.
The Fed has been assigned two
goals for monetary policyâmaximum
employment and stable prices.
We remain committed to supporting maximum
employment, bringing inflation back
down to our 2 percent 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 look forward to your questions.
This concludes the Transcript
of Chair Powellâs Press
Conference Opening Statement.
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