Press conference exchange between MICHAEL MCKEE and Fed Chair Jerome Powell:

user: Michael McKee from Bloomberg Television and Radio. In June, you forecast a 5.6 percent year-end median fed funds rate, and since then, you’ve more than doubled your growth forecast. You lowered your unemployment forecast significantly. So, what would justify that last move, because the median forecast is for lower inflation? And given all the known unknowns that you face, how much confidence do you have, can investors have, or the American people have in your forecasts?

assistant: Well, forecasts are highly uncertain. Forecasting is very difficult. Forecasters are a humble lot with much to be humble about. But to get to, to your question, though—what’s happened is, growth has come in stronger, right? Stronger than expected—and that’s required higher rates. Unemployment, you know—you also see that the, the ultimate unemployment rate is not as high, but that—that’s really because of what we’ve been seeing in the labor market. We’ve seen more and more progress in the labor market without seeing significantly higher unemployment. So we’re, we’re continuing that trend. In terms of inflation, you, you are seeing—the last three readings are, are very good readings. It’s only three readings, you know. We—we’re well aware that we need to see more than three readings. But if you look at June, July, and August, you’re looking at, you know, really significant declines in core inflation, largely in the goods sector—also to some extent in housing services and just a little in nonhousing services. Those are the three buckets. Headline inflation, of course, has come way down, largely due to lower energy prices, some of which is now reversing. So I think—people should know that, that economic forecasting is very difficult, and these are highly uncertain forecasts. But these are—these are our forecasts. You know, they’re, they’re—we have very high-quality people working on these forecasts, and I think they stand up well against other forecasters. But just the nature of the business is, the economy is very difficult to forecast.

user: Given the—given the forecast that you have, what justified not moving today, and what could justify moving in the future if you think inflation is coming down? In other words, why did you leave that extra dot in?

assistant: Well, I, I think we have come very far very fast in, in the, the rate increases that we’ve made. And I think it was important at the beginning that we move quickly, and we did. And, and I think as we get closer to the rate that we think—the stance of monetary policy that we think is appropriate to bring inflation down to 2 percent over time, you know, the risks become more two sided, and the risk of overtightening and the risk of, of undertightening becomes more equal. And I think the, the natural, commonsense thing to do is, as you approach that, you move a little more slowly as you get closer to it. And that, that’s what we’re doing. So we’re, we’re taking advantage of the fact that we have moved quickly to move a little more carefully now as we—as we find our way to, to the right level of restriction that we need to get inflation back down to 2 percent.