FOMC Press Conference October 30, 2019 | Summary and Q&A

TL;DR

Federal Reserve Chair Powell announced a third interest rate cut this year, citing global developments and ongoing risks to the U.S. economy. Powell expressed optimism about solid household spending and a strong job market, but noted weaknesses in business investment, exports, and manufacturing output. He emphasized the Fed's commitment to sustaining the expansion and achieving the 2 percent inflation objective.

Key Insights

• ☠️ The Fed is confident that its policy adjustments, including three interest rate cuts this year, are supporting economic growth and will provide meaningful support to the economy.
• 😶 The Fed is monitoring various risks to the outlook, including slowing global growth, trade policy developments, and muted inflation pressures.
• 🔬 The labor market remains strong, with low unemployment rates, rising wages, and increasing labor force participation.
• 🙈 The Fed sees the current stance of monetary policy as likely to remain appropriate as long as the economy's performance aligns with their outlook of moderate growth, a strong labor market, and inflation near 2 percent.
• 🪛 The Fed remains committed to achieving its 2 percent inflation objective and considers inflation expectations crucial in driving actual inflation.

Transcript

CHAIR POWELL. Good afternoon, and welcome. My colleagues at the Federal Reserve and I are dedicated to serving the American people. We do this by steadfastly pursuing the goals that Congress has given us: maximum employment and stable prices. We're committed to making the best decisions we can based on facts and objective analysis. Today we decided... Read More

Questions & Answers

Q: How does the Federal Reserve define its current stance of monetary policy?

The current stance of monetary policy is considered likely to remain appropriate as long as incoming information about the economy remains consistent with the Fed's outlook of moderate economic growth, a strong labor market, and inflation near 2 percent.

Q: Is there a possibility of further rate cuts in the future?

The Fed stated that if developments emerge that cause a material reassessment of their outlook, they will respond accordingly. However, they believe that the current stance of policy is supportive of economic growth and contains meaningful support to the economy.

Q: What are the Fed's concerns about inflation expectations?

The Fed considers inflation expectations to be essential in driving actual inflation. They are currently running below their symmetric 2 percent objective, and the risk of below-target inflation could lead to an undesirable downward slide in long-term inflation expectations. The Fed is committed to achieving its 2 percent inflation objective.

Q: How is the Fed addressing the recent problems in the repo market?

The Fed is focused on getting the level of reserves back up to the appropriate level, around $1.45 trillion. They are also analyzing the lack of liquidity flow in the system and exploring potential adjustments to allow liquidity to flow more easily without compromising safety and soundness.

Summary & Key Takeaways

• The Federal Reserve has lowered interest rates for the third time this year to support the U.S. economy against global developments and ongoing risks.

• The U.S. economy is growing at a moderate rate, with strong household spending, a healthy job market, rising incomes, and solid consumer confidence. However, business investment, exports, and manufacturing have been weak.

• The job market remains strong, with low unemployment and rising wages. Inflation continues to run below the 2 percent objective, but the Fed expects it to rise to 2 percent.

• The Fed believes that monetary policy is in a good place to achieve sustained expansion, a strong labor market, and inflation near the 2 percent objective.