FOMC Press Conference June 13, 2018

TL;DR

The economy is strong, with low unemployment, inflation near target, and sustained growth. The Federal Reserve is committed to gradually raising interest rates to sustain this environment.

Transcript

Transcript of Chairman Powell's Press Conference June 13, 2018 CHAIRMAN POWELL. Good afternoon. Thanks very much for being here. I know that a number of you will want to talk about the details of our announcement today, and I am happy to do that in a few minutes. But because monetary policy affects everyone, I want to start with a plain-English sum... Read More

Key Insights

• ☠️ The Fed aims to sustain a strong and resilient economy through gradual interest rate increases.
• ™️ Trade tensions and trade policy changes are a concern for businesses, but their impact is not yet reflected in economic data.
• 🇨🇫 The Fed is committed to communicating its actions and fostering public understanding of its policies.
• 😒 Inflation is moving towards the 2 percent target, but the Fed remains vigilant and will use its tools to maintain price stability.
• 😘 Corporate debt levels are high, particularly among nonfinancial corporates, but low defaults and low interest rates mitigate risks.
• ☠️ The yield curve and long-term interest rates are closely monitored, as they provide signals about the appropriate stance of policy.

Questions & Answers

Q: How do you assess the risk of inflation increases beyond the forecast?

Inflation has gradually moved towards the 2 percent objective. While recent data is encouraging, sustained inflation near the target is necessary, and the Fed will use its tools to maintain that level.

Q: How does fiscal policy, such as tax cuts, impact growth?

The Committee believes that fiscal policy changes will provide significant support to the economy, boosting demand and potentially driving productivity and potential output.

Q: Are there concerns about the impact of trade tensions on the U.S. and global economies?

While the Fed is focused on its assigned roles of maximum employment and stable prices, business contacts have expressed concerns about the disruptive effects of trade changes. However, these concerns are not reflected in current economic data.

Q: Are we in a credit bubble given the high levels of corporate debt and the increase in buybacks?

Household credit levels are not a concern, while banks are well-capitalized. Nonfinancial corporates have high leverage, but defaults are low, and interest rates remain low. The Fed is monitoring the situation but does not see it as a significant risk currently.

Summary & Key Takeaways

• The economy is doing well, with strong job growth and low unemployment.

• The Federal Reserve has been gradually raising interest rates to return them to a more normal level as the economy strengthens.

• The Fed aims to sustain a strong and resilient economy by fostering a public conversation and improving communication regarding its actions and policies.