FOMC Press Conference February 1, 2023 | Summary and Q&A

TL;DR

Chair Powell emphasizes the Federal Reserve's commitment to reducing high inflation and maintaining price stability, despite acknowledging the ongoing challenges. The Committee raised the policy interest rate by 25 basis points and expects additional rate hikes to achieve the inflation target. The Chair highlights the tight labor market, elevated inflation, and the need for ongoing efforts to restore price stability.

Key Insights

• ✋ The Federal Reserve is strongly committed to reducing high inflation and maintaining price stability.
• 🔬 Price stability is crucial for a functioning economy and a sustained period of labor market conditions that benefit everyone.
• 🐢 The U.S. economy experienced slower growth last year, but the labor market remains tight with low unemployment and elevated wage growth.
• 👾 Inflation remains well above the 2 percent target, but there are signs of a welcome reduction in the monthly pace of increases.
• 🤨 The Federal Reserve will continue to raise interest rates and reduce the balance sheet size to achieve a sufficiently restrictive monetary policy.
• 📲 The inflation outlook is uncertain, and the Federal Reserve will closely monitor incoming data and adjust policy accordingly.
• ✳️ The Federal Reserve does not foresee an immediate risk of a recession but expects continued subdued economic growth.
• ✋ The Federal Reserve is mindful of the risks associated with ongoing high inflation, including the potential for inflation expectations to become entrenched.

Transcript

Transcript of Chair Powell's Press Conference February 1, 2023 CHAIR POWELL. Good afternoon, and welcome. My colleagues and I understand the hardship that high inflation is causing, and we are strongly committed to bringing inflation back down to our 2 percent goal. Over the past year, we have taken forceful actions to tighten the stance of monetar... Read More

Questions & Answers

Q: What measures have the Federal Reserve taken to address high inflation?

The Federal Reserve has implemented forceful actions to tighten the stance of monetary policy, including raising the policy interest rate and reducing the size of the balance sheet.

Q: How has the U.S. economy performed recently?

The U.S. economy experienced slower growth last year, but indicators suggest modest growth in spending and production this quarter. The labor market remains tight, with job gains and low unemployment, although there are signs of slowdown in wage growth.

Q: What is the Federal Reserve's outlook on inflation?

Inflation remains above the 2 percent target, but recent data show a welcome reduction in the monthly pace of increases. The longer the current high inflation continues, the greater the risk of inflation expectations becoming entrenched.

Q: Will the Federal Reserve pause the rate increases or consider alternate measures?

The Federal Reserve believes ongoing rate hikes are necessary to achieve a sufficiently restrictive monetary policy and bring inflation down to 2 percent. However, the Committee will continue to assess the economic data and make data-dependent decisions in future meetings.

Summary & Key Takeaways

• Chair Powell and the Federal Reserve are determined to bring down high inflation and ensure price stability.

• The Committee raised the policy interest rate by 25 basis points and anticipates further rate increases to achieve the inflation target.

• Despite a slower economic growth rate, the labor market remains strong, with a low unemployment rate and elevated wage growth.