FOMC Press Conference March 21, 2018

TL;DR

The US job market remains strong with a low unemployment rate of 4.1%, and the economy is expanding. Inflation is moving towards the Federal Open Market Committee's (FOMC) 2% goal. The FOMC has raised the target rate for the federal funds rate by 0.25%, bringing it to 1.5-1.75%. The decision is part of the gradual scaling back of monetary policy accommodation.

Transcript

CHAIRMAN POWELL. Good afternoon. I have a brief statement, and then I'll be happy to respond to your questions. The job market remains strong, the economy continues to expand, and inflation appears to be moving toward the FOMC's 2 percent longer-run goal. As you already know, we decided today to raise the target rate for the federal funds rate by 1... Read More

Key Insights

• 😘 The job market remains strong, with high job gains and a low unemployment rate.
• 😚 Inflation is below the 2% goal but is expected to move closer to 2% in the coming months.
• 🉐 The economy is expanding, supported by fiscal policy, job gains, foreign growth, and accommodative financial conditions.
• ☠️ The FOMC's monetary policy stance is focused on sustaining the economic expansion, strong labor market, and aiming for 2% inflation. Gradual increases in the federal funds rate are expected.

Questions & Answers

Q: How is the job market performing?

The job market remains strong, with job gains well above the pace needed to absorb new entrants into the labor force. The unemployment rate is low at 4.1%, and the labor force participation rate is increasing.

Q: What is the outlook for inflation?

Inflation remains below the 2% goal, but it is expected to move closer to 2% in the coming months as earlier price declines drop out of the calculation. The FOMC's inflation objective is symmetric, meaning they aim to prevent both persistent inflation deviations above and below 2%.

Q: How is the economy expanding?

Although growth rates of household spending and business investment have moderated early this year, the fundamentals underpinning demand remain solid. Fiscal policy has become more stimulative, ongoing job gains are boosting incomes and confidence, foreign growth is on a firm trajectory, and overall financial conditions remain accommodative.

Q: What is the FOMC's monetary policy stance?

The FOMC has decided to raise the target rate for the federal funds rate by 0.25%, marking another step in the gradual process of scaling back monetary policy accommodation. The FOMC aims to sustain the economic expansion and a strong labor market while aiming for 2% inflation. Further gradual increases in the federal funds rate are expected to best promote these goals.

Summary & Key Takeaways

• The job market is strong, with job gains averaging 240,000 per month over the past three months and a low unemployment rate of 4.1% in February.

• The economy continues to expand, although growth rates of household spending and business investment have moderated early this year.

• Inflation remains below the FOMC's 2% goal, but it is expected to move closer to 2% in the coming months.