FOMC Press Conference Sept.18, 2019: Introductory Statement | Summary and Q&A

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September 18, 2019
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Federal Reserve
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FOMC Press Conference Sept.18, 2019: Introductory Statement

TL;DR

Chair Powell announces the decision to lower interest rates to help keep the US economy strong and provide insurance against ongoing risks.

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Key Insights

  • โ˜ ๏ธ The Federal Reserve's decision to lower interest rates aims to support the US economy amidst global growth weakness and trade policy uncertainty.
  • ๐Ÿ’ช The US economy has performed well, driven by strong household spending, but business investment and exports have weakened.
  • ๐Ÿ˜˜ The job market remains strong, with low unemployment rates, solid job gains, and rising wages.
  • ๐Ÿคจ Inflation pressures remain muted, with below-target inflation raising concerns about longer-term inflation expectations.
  • ๐Ÿฅ… The Federal Reserve is closely monitoring risks and adjusting monetary policy as appropriate to sustain the expansion and achieve its goals.
  • ๐Ÿ–๏ธ Monetary policy is limited in its ability to address certain factors, and fiscal policy plays a crucial role in supporting long-term growth.
  • โ“ The Federal Reserve remains independent and focused on its mandate of maximum employment and stable prices, despite criticism from politicians.
  • โ˜ ๏ธ The global integration of capital markets affects US interest rates, with low rates abroad pulling down US rates and impacting US financial conditions.

Transcript

Transcript of Chair Powell's Press Conference September 18, 2019 CHAIR POWELL. Good afternoon, everyone, 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 Congress has given us: maximum employment and stable prices. We are committed to making the best d... Read More

Questions & Answers

Q: Why did the Federal Reserve decide to lower interest rates?

The decision to lower interest rates was made to support the US economy amidst global growth weakness and trade policy uncertainty. It aims to sustain the expansion, maintain a strong job market, and achieve the 2% inflation objective.

Q: How are business investment and exports affected by global growth weakness and trade policy uncertainty?

Business investment and exports have weakened due to slower growth abroad and trade policy tensions. Uncertainty about trade policy has discouraged business investment, causing a modest decline in the second quarter and continued softness in recent indicators.

Q: How does the Federal Reserve view inflation and what are the projections for inflation in the coming years?

Inflation continues to run below the target of 2%, with total PCE inflation at 1.4% and core inflation at 1.6% in the past 12 months. However, inflation pressures remain muted and longer-term inflation expectations are at the lower end of historical ranges. The median projection is for inflation to rise to 1.9% this year and 2% in 2021.

Q: Are there any concerns about the high levels of consumer and corporate debt?

While the household sector is in good shape with less leverage, the business sector has a high level of debt. Highly leveraged companies pose an amplifier risk during an economic downturn. The Federal Reserve is monitoring this carefully, and it is the subject of ongoing research.

Summary & Key Takeaways

  • Chair Powell announces the decision to lower interest rates to support the US economy in the face of global growth weakness and trade policy uncertainty.

  • The US economy continues to perform well, driven by strong household spending, rising incomes, and solid consumer confidence, despite weakened business investment and exports.

  • The job market remains strong, with low unemployment rates, solid job gains, and rising wages, particularly for lower-paying jobs.

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