FOMC Press Conference December 19, 2018: Introductory Statement | Summary and Q&A

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December 19, 2018
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Federal Reserve
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FOMC Press Conference December 19, 2018: Introductory Statement

TL;DR

Chairman Powell discusses the current state of the U.S. economy, including strong growth, low unemployment, and low inflation. He addresses concerns about recent crosscurrents and outlines the Federal Reserve's plan to continue gradually raising interest rates.

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Key Insights

  • 😘 The U.S. economy has experienced strong growth and low unemployment, benefiting many Americans.
  • 🌐 Crosscurrents, such as global growth moderation and increased market volatility, have emerged since the September meeting.
  • 🙂 The Federal Reserve expects growth to continue at healthy levels, but has slightly lowered its forecasts for next year.
  • ⚾ Monetary policy will be adjusted based on incoming data to sustain the expansion and keep inflation near 2 percent.
  • 🏦 The Federal Reserve's regulatory proposals have primarily focused on tailoring regulations for smaller and less complex banks, while maintaining high expectations for larger banks.

Transcript

Transcript of Chairman Powell's Press Conference December 19, 2018 CHAIRMAN POWELL. Good afternoon, everyone. Thanks very much for being here today. [Cough] Pardon me. Over the past year the economy has been growing at a strong pace, the unemployment rate has been near record lows, and inflation has been low and stable. All of those things remain t... Read More

Questions & Answers

Q: Why is inflation remaining low despite a tight labor market?

Inflation has remained slightly below 2 percent despite low unemployment and strong growth. This could be attributed to the success of central banks in anchoring inflation expectations, resulting in less responsiveness to changes in growth.

Q: Will the Federal Reserve reconsider the G-SIB capital surcharge for the largest banks?

The Federal Reserve believes that larger and more complex banks should be held to higher standards and expectations. While regulations may be tailored for smaller institutions, the high expectations for larger banks will not change.

Q: With the recent stock market volatility, does the Federal Reserve think that lower yields are a sign of weaker growth or a positive for the housing sector?

Lower long-term Treasury yields could be a reflection of a risk-off sentiment in the stock market. The Federal Reserve remains focused on a broad range of financial indicators and will continue monitoring the state of the economy.

Summary & Key Takeaways

  • The U.S. economy has been growing at a strong pace with low unemployment and stable inflation.

  • Some crosscurrents have emerged recently, including moderate global growth and increased financial market volatility.

  • The Federal Reserve expects growth to continue at healthy levels, with a modestly lower path for the federal funds rate next year.

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