FOMC Press Conference, September 22, 2021 | Summary and Q&A

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September 22, 2021
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Federal Reserve
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FOMC Press Conference, September 22, 2021

TL;DR

Federal Reserve Chair Powell reaffirms commitment to achieving maximum employment and price stability through continued monetary policy support. He discusses the ongoing economic recovery, inflation expectations, and the potential development of a central bank digital currency (CBDC).

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Key Insights

  • ❓ The Federal Reserve is committed to achieving its dual mandate of maximum employment and price stability.
  • 😮 Economic indicators show ongoing improvement in economic activity and employment, although certain factors such as rising COVID-19 cases and supply constraints may slow progress.
  • 🍉 Inflation is elevated but expected to moderate in the future. The Fed will closely monitor inflation expectations and react if they deviate from its longer-term inflation goal of 2%.
  • 💦 The Federal Reserve is actively exploring the potential development of a central bank digital currency (CBDC) and is working on evaluating the technology and addressing policy issues.
  • 🎚️ The Fed will continue to monitor corporate debt levels and potential risks to financial stability and take appropriate supervisory action if necessary to protect the public's interest and maintain a stable currency.

Transcript

Transcript of Chair Powell's Press Conference September 22, 2021 CHAIR POWELL. Good afternoon. At the Federal Reserve, we are strongly committed to achieving the monetary policy goals that Congress has given us: maximum employment and price stability. Today, the Federal Open Market Committee kept interest rates near zero and maintained our current ... Read More

Questions & Answers

Q: How does the Federal Reserve determine "substantial further progress" towards its maximum employment goal?

The test for beginning the taper is achieving substantial further progress towards the goals of 2% inflation and maximum employment. Inflation has already achieved substantial further progress, and maximum employment is also on track, with indicators showing significant improvement. The Committee will decide based on a range of perspectives on whether substantial further progress has been met.

Q: Are current inflation expectations consistent with the Federal Reserve's goals?

Inflation expectations have increased moderately, which is a positive development. The Fed closely monitors inflation expectations and will react if they rise to levels inconsistent with the 2% goal. It is important to note that various measures of inflation expectations show different levels, but overall, they are broadly consistent with longer-term inflation goals.

Q: How does the Federal Reserve view the recent stock trading activities of regional Fed Bank presidents?

The recent stock trading activities of regional Fed Bank presidents are a serious matter. The Board closely monitors these activities and will take appropriate supervisory action if necessary. The Fed is conducting a comprehensive review of the ethics rules around permissible financial holdings and activities by Fed officials to strengthen the public's trust in its mission and maintain the stability of financial markets.

Q: How does the Federal Reserve plan to address the increase in corporate debt and potential risks to financial stability?

The Federal Reserve acknowledges the increase in corporate debt but notes that corporate defaults in the United States are currently low. The Fed remains vigilant and closely monitors corporate debt levels and risks to financial stability. The focus is on maintaining a stable currency and payment system while ensuring appropriate regulatory protections are in place. The Evergrande situation in China is specific to that country and does not have a significant direct impact on the United States.

Summary & Key Takeaways

  • The Federal Reserve maintains its commitment to achieving maximum employment and price stability.

  • Indicators show that economic activity and employment are strengthening, although progress may be slowed by factors such as rising COVID-19 cases and supply constraints.

  • Inflation is elevated but expected to moderate in the future. The Fed will react if sustained higher inflation becomes a serious concern.

  • Powell discusses ongoing efforts to develop a CBDC, emphasizing the need to ensure a stable and trustworthy currency and payment system.

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