FOMC Press Conference, December 14, 2022 | Summary and Q&A

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December 14, 2022
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Federal Reserve
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FOMC Press Conference, December 14, 2022

TL;DR

Chair Powell announces a ½ percentage point increase in the policy interest rate and highlights the commitment to bringing inflation down to the 2 percent goal.

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Key Insights

  • ✋ The FOMC is strongly committed to bringing high inflation down to the 2 percent target.
  • ☠️ While the labor market remains tight, inflation remains a concern, and the FOMC expects ongoing rate hikes to be appropriate.
  • 🧑‍⚕️ The Fed acknowledges the structural labor shortage in the economy, with vacancies exceeding the supply of available workers.
  • 🐢 The projected slow growth and tightening monetary policy indicate the Fed's determination to restore price stability and address inflationary pressures.

Transcript

December 14, 2022 Chair Powell's Press Conference FINAL Page 1 of 23 Transcript of Chair Powell's Press Conference December 14, 2022 CHAIR POWELL. Good afternoon. Before I go into the details of today's meeting, I would like to underscore for the American people that we understand the hardship that high inflation is causing and that we are strongly... Read More

Questions & Answers

Q: How does the FOMC plan to tackle the high inflation rates and bring them down to the 2 percent goal?

The FOMC is committed to using its tools and maintaining a restrictive policy stance for some time to restore price stability. It aims to balance supply and demand conditions in the labor market, ease upward pressures on wages and prices, and achieve sustained downward inflation.

Q: Does the FOMC foresee any rate cuts in 2023?

The FOMC is focused on moving to a sufficiently restrictive policy stance and returning inflation to the target of 2 percent. Rate cuts are not being considered until there is confidence that inflation is consistently moving down to the target.

Q: How does the FOMC account for potential exacerbations of inequality in its risk calculations?

The FOMC monitors wage growth and unemployment data, paying attention to different sectors and income levels. It aims to achieve maximum employment while considering potential impacts on inequality. The goal is to create a strong labor market that benefits all.

Q: Is there a possibility of the Fed changing its 2 percent inflation target?

The Fed maintains its 2 percent inflation target and has no plans to change it. The focus is on using tools to achieve price stability and prevent inflation from becoming entrenched in the economy.

Summary & Key Takeaways

  • The FOMC raised the policy interest rate by ½ percentage point, with ongoing increases anticipated to attain a sufficiently restrictive monetary policy stance.

  • The U.S. economy has slowed, with modest growth of spending and production, weakened activity in the housing sector, and slower output growth affecting business fixed investment.

  • Despite a tight labor market, high inflation remains a concern, with total PCE prices rising 6 percent and core PCE prices rising 5 percent over the past 12 months.

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