FOMC Press Conference June 19, 2019: Introductory Statement

TL;DR

Chair Powell emphasizes the goal of sustaining economic expansion, discusses uncertainties and risks to the outlook, and suggests that the case for a rate cut has strengthened.

Transcript

Transcript of Chair Powell's Press Conference June 19, 2019 CHAIR POWELL. Good afternoon, and welcome. My colleagues and I have one overarching goal: to sustain the economic expansion, with a strong job market and stable prices, for the benefit of the American people. At the FOMC meeting that concluded today, we maintained our policy interest rate ... Read More

Key Insights

• ☠️ The case for a rate cut has strengthened due to increased uncertainties and muted inflation pressures.
• 💪 Solid fundamentals, like consumer spending and strong employment, support continued growth but risks from trade developments and global growth remain.
• 😮 Inflation has been running below the 2 percent objective, and wage growth, while rising, may not have a significant impact on inflation.
• ✳️ The Fed closely monitors leveraged lending risks and has authority to supervise banks in managing such risks.
• 🔨 The Fed is conducting a yearlong review of its monetary policy strategy, tools, and communications, seeking input from various stakeholders.
• ⚖️ Balance sheet runoff is nearing its end, and the Fed is prepared to adjust balance sheet policy if needed to serve its dual-mandate objectives.

Questions & Answers

Q: Did the FOMC consider a rate cut at this meeting?

Chair Powell explains that while many participants see a strengthened case for a rate cut, the Committee decided to wait and gather more information before making a decision.

Q: How does the Fed balance the risks of waiting too long to cut rates and cutting rates prematurely?

Chair Powell acknowledges the importance of striking the right balance but states that, in the current context, it is more prudent to wait and see how uncertainties unfold before taking further action.

Q: Can Fed policy solve the crosscurrents and uncertainties in the economy?

Chair Powell highlights that the Fed has tools to support economic activity, but uncertainties and risks extend beyond monetary policy and may require broader measures.

Q: Is there concern about digital currencies, like Facebook's Libra, undermining the Fed's influence?

Chair Powell notes that digital currencies are still in their infancy, and while they are monitored, they do not pose an immediate threat to central bank currencies. He emphasizes the importance of safety and soundness if such currencies gain significant adoption.

Summary & Key Takeaways

• Chair Powell highlights the importance of sustaining economic expansion, with a strong labor market and stable inflation.

• He acknowledges the recent uncertainties and risks, including trade developments and concerns about global growth.

• Economic fundamentals, such as solid consumer spending and strong employment, support continued growth, but crosscurrents, such as weak manufacturing and inflation concerns, warrant attention.