FOMC Press Conference September 22, Introductory Statement

TL;DR

Chair Powell discussed the Federal Reserve's commitment to achieving maximum employment and price stability, the current economic recovery, concerns about inflation, and the potential timing of tapering asset purchases.

Transcript

Transcript of Chair Powell's Press Conference September 22, 2021 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. Today, the Federal Open Market Committee kept interest rates near zero and maintained our current ... Read More

Key Insights

• ❓ The Federal Reserve remains focused on achieving maximum employment and price stability.
• 😮 Economic activity and employment indicators have strengthened, but the recovery has been impacted by the rise in COVID-19 cases and supply constraints.
• 🍉 Inflation is currently elevated due to supply bottlenecks, but the Fed expects it to decrease towards their longer-term goal.
• ☠️ The timing of interest rate liftoff will depend on labor market conditions and inflation reaching the Committee's goals.
• 🥹 The Fed is conducting a comprehensive review of ethics rules regarding financial holdings and activities by Fed officials due to recent concerns.
• 🙈 The Fed is actively monitoring corporate debt levels, but the Evergrande situation is seen as specific to China and doesn't pose significant risks to the U.S. corporate sector.
• 🏦 The Fed is actively evaluating the potential issuance of a central bank digital currency (CBDC) but is focused on making an informed decision that considers the benefits, costs, and risks.
• 🇨🇫 The Fed's decision on a CBDC would require broad support from government officials and public engagement.
• 😍 Chair Powell believes it's more important to make the right decision regarding a CBDC than to rush the process and risk potential issues.

Questions & Answers

Q: What does Chair Powell consider as "substantial further progress" in achieving maximum employment?

Chair Powell explained that "substantial further progress" is a test for beginning the tapering of asset purchases and is judged based on indicators such as unemployment rates and participation rates. While opinions may vary among committee members, Chair Powell believes that the test for employment is almost met.

Q: How does Chair Powell view the current level of inflation and its impact on households?

Chair Powell acknowledges that inflation is elevated and may remain so in the coming months due to supply bottlenecks. However, he does not anticipate a significant impact on households, as inflation projections for next year remain moderate.

Q: What factors would influence the timing of interest rate liftoff?

Chair Powell emphasized that interest rate liftoff would only occur when the labor market conditions reach levels consistent with the Committee's assessment of maximum employment and inflation rises to and moderately exceeds 2 percent. The timing of tapering asset purchases will not directly signal the timing of interest rate liftoff.

Q: What is Chair Powell's view on high unemployment rates for minority groups?

Chair Powell acknowledges the persistent disparities in employment, with joblessness continuing to fall disproportionately on lower-wage workers and African Americans and Hispanics. He believes that eliminating inequality and racial disparities requires broader policies across society, focusing on education and reducing discrimination.

Summary & Key Takeaways

• Chair Powell reaffirmed the Federal Reserve's commitment to its monetary policy goals of maximum employment and price stability.

• Economic indicators such as real GDP growth and employment have shown improvement, but the recovery has been impacted by factors like the rise in COVID-19 cases and supply constraints.

• Inflation remains elevated due to supply bottlenecks, but the Fed expects it to moderate in the long run.