Press conference exchange between COURTENAY BROWN and Fed Chair Jerome Powell:

user: Thanks for taking our questions, Chair Powell. So looking at the SEP, it looks like GDP for this year was raised significantly—your forecast for GDP this year. The unemployment rate, meanwhile, was pulled downward. And so should we take that as a sign that the Committee is more confident about the prospects of a soft landing—at least more—at least as it relates to what you were expecting in, in March?

assistant: You know, I—I would just say it this way. I continue to think—and this really hasn’t changed—that there is a path to getting inflation back down to 2 percent without having to see the sharp downturn and, and large losses of employment that we’ve seen in so many past instances. It’s, it’s possible. A—in a way, a strong labor market is—that, that gradually cools could, could aid that along—it could aid that along. But I, I guess I want to come back to the, the main thing, which is, though, simply this. We, we see—the Committee— as you can see from the SEP, the Committee is completely unified in the need to get inflation down to 2 percent and will do whatever it takes to get it down to 2 percent over time. That is our plan. And, you know, we, we understand that allowing inflation to get entrenched into the—in the U.S. economy is the thing that we cannot, cannot allow to happen for the benefit of today’s workers and families and businesses but also for the future. Getting price stability back and, and restored will benefit generations of people as long as it’s sustained. And it really is the bedrock of the economy. And, and you should understand is our top priority.

user: Just a quick follow-up on that. I’m just a little confused because you said the Committee will do whatever it takes to get inflation down over time, but when I look at the SEP, inflation is still projected to be elevated next year, but the fed funds rate is lower than where it is now. Can you help me understand that?

assistant: Sure. So, you know, if you look two and three years out with, with the forecast—first of all, I wouldn’t—I wouldn’t put too much weight on forecasts even one year out because they’re, they’re so highly uncertain. But what they’re showing is that as inflation comes down in the—in the forecast, if you don’t lower interest rates, then real rates are actually going up, right? So just to maintain a real rate, the nominal rate at that point—two years out, let’s say—should come down just to maintain real rates. And if—and actually, you know, since we’re, we’re probably going to—we’re, we’re having real rates that are going to have to be meaningfully positive and significantly. So for us to get inflation down, that probably means— that, that certainly means that, that it will be appropriate to cut rates at such time as inflation is coming down really significantly. And again, we’re talking about a couple of years out. I think, as, as anyone can see, not a single person on the Committee wrote down a rate cut this year, nor do I think it is at all likely to be appropriate, if you think about it. Inflation has not really moved down. It has—it has not so far reacted much to our—to our existing rate hikes. And so we’re going have to keep at it.