Press conference exchange between COLBY SMITH and Fed Chair Jerome Powell:

user: Thank you. Colby Smith with the Financial Times. Given the economic data since the December meeting, is the trajectory for the fed funds rate in the most recent SEP still the best guidepost for the policy path forward? Or does ongoing now mean more than two rate rises now?

assistant: So you’re right. At the December meeting, we all wrote down our best estimates of what we thought the ultimate level would be, and that’s obviously back in December. And the median for that was between 5 and 5¼ percent. At the March meeting, we’re going to update those assessments. We did not update them today. We did, however, continue to say that we believe ongoing rate hikes will be appropriate to attain a sufficiently restrictive stance of policy to bring inflation back down to 2 percent. We think we’ve covered a lot of ground, and financial conditions have certainly tightened. I would say we still think there’s work to do there. We haven’t made a decision on exactly where that will be. I think, you know, we’re going to be looking carefully at the incoming data between now and the March meeting and then the May meeting. I don’t feel a lot of certainty about where that will be. It could certainly be higher than we’re writing down right now. If we come to the view that we need to write down to, you know, to move rates up beyond what we said in December, we would certainly do that. At the same time, if the data come in, in the other direction, then we’ll, you know, we’ll make data-dependent decisions at coming meetings, of course.

user: Just as a quick follow-up, how are you viewing the balance of risk between those two options of, you know, the likelihood of maybe falling short of that or going beyond that level?

assistant: I guess I would say it this way. I continue to think that it’s very difficult to manage the risk of doing too little and finding out in 6 or 12 months that we actually were close but didn’t get the job done. Inflation springs back, and we have to go back in. And now, you really do worry about expectations getting unanchored and that thing. This is a very difficult risk to manage, whereas I—of course, we have no incentive and no desire to overtighten. But we, you know, if we feel like we’ve gone too far, we can certainly—and inflation is coming down faster than we expect, then we have tools that would work on that. So I do think that, in this situation, where we have still the highest inflation in 40 years, you know, the job is not fully done. As I started to mention earlier, we have a sector that represents 56 percent of the core inflation index where we don’t see disinflation yet. So we don’t see it. It’s not happening yet. Inflation in the core services ex. housing is still running at 4 percent on a 6- and 12-month basis. So there’s not—nothing happening there. In the other two sectors representing, you know, less than 50 percent, you actually, I think, now have a story that is credible, that’s coming together, although you don’t actually see disinflation yet in housing services, but it’s in the pipeline, right? So, for the third sector, we don’t see anything here. So I think it would be premature—it would be very premature to declare victory or to think that we’ve really got this. We need to see—our goal, of course, is to bring inflation down. And how do we get that done? There are many, many factors driving inflation in that sector, and they should be coming into play to have inflation—the disinflationary process begin in that sector. But, so far, we don’t see that. And I think until we do, we see ourselves as having a lot of work left to do.