FOMC Press Conference Introductory Statement, December 16, 2020

TL;DR

Fed Chairman Jerome Powell reaffirms the central bank's commitment to achieving maximum employment and price stability, while providing relief and support to limit lasting damage to the economy during the pandemic.

Transcript

CHAIR POWELL. Good afternoon. At the Federal Reserve, we are strongly committed to achieving the monetary policy goals that Congress has given us-maximum employment and price stability. Since the beginning of the pandemic, we have taken forceful actions to provide relief and stability, to ensure that the recovery will be as strong as possible, and ... Read More

Key Insights

• ❓ The Fed is strongly committed to providing support to the economy until the recovery is complete, with a focus on maximum employment and price stability.
• 😑 While economic activity has improved, it remains below pre-pandemic levels, and the path ahead is uncertain.
• 📪 The labor market has made progress in recovering lost jobs, but unemployment remains elevated, especially among lower-wage workers and minority groups.
• 🎯 Inflation remains below the Fed's target, reflecting the ongoing economic challenges posed by the pandemic.

Questions & Answers

Q: What are the Federal Reserve's monetary policy goals?

The Fed's goals are maximum employment and price stability. They are committed to supporting the economy until these goals are achieved.

Q: How has economic activity been affected by the pandemic?

Economic activity has rebounded from the lows of the second quarter, but the pace of improvement has slowed. Spending on goods has been strong, while sectors requiring close social interaction, such as travel and hospitality, have remained low.

Q: What is the current state of the labor market?

More than half of the jobs lost during the pandemic have been regained, but the pace of improvement has slowed. Job growth slowed in November, and the unemployment rate remains elevated, particularly for lower-wage workers and minority groups.

Q: How has the pandemic impacted inflation?

Inflation remains below the Fed's 2% target. Prices have picked up over the summer but have leveled off recently, particularly in sectors most affected by the pandemic. The Fed expects inflation to gradually rise, but the economic uncertainty makes it difficult to predict the timing and scope of the implications.

Summary & Key Takeaways

• The Federal Reserve is committed to achieving maximum employment and price stability, providing relief and stability to ensure a strong and lasting economic recovery.

• Economic activity has gradually improved since the onset of the pandemic, but the pace of improvement has moderated in recent months, especially in sectors that rely on close social interaction.

• The labor market has made progress in recovering lost jobs, but unemployment remains elevated, particularly for lower-wage workers and minority groups.

• Inflation remains below the Fed's 2% target, but economic uncertainty and the ongoing surge in COVID-19 cases pose challenges for the outlook.