FOMC Press Conference - 2025-03-19
Central bank: fed | Type: press_conference | Date: 2025-03-19

March 19, 2025 Chair Powell’s Press Conference FINAL
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Transcript of Chair Powell’s Press Conference
March 19, 2025
CHAIR POWELL. Good afternoon. My colleagues and I remain squarely focused on
achieving our dual-mandate goals of maximum employment and stable prices for the benefit of
the American people. The economy is strong overall and has made significant progress toward
our goals over the past two years. Labor market conditions are solid, and inflation has moved
closer to our 2 percent longer-run goal, though it remains somewhat elevated.
In support of our goals, today the Federal Open Market Committee decided to leave our
policy interest rate unchanged. We also made the technical decision to slow the pace of decline
in the size of our balance sheet. I’ll have more to say about these decisions after briefly
reviewing economic developments.
Economic activity continued to expand at a solid pace in the fourth quarter of last year,
with GDP rising at 2.3 percent. Recent indications, however, point to a moderation in consumer
spending following the rapid growth seen over the second half of 2024. Surveys of households
and businesses point to heightened uncertainty about the economic outlook. It remains to be
seen how these developments might affect future spending and investment. In our Summary of
Economic Projections, the median participant projects GDP to rise 1.7 percent this year,
somewhat lower than projected in December, and to rise a bit below 2 percent over the next two
In the labor market, conditions remain solid. Payroll job gains averaged 200,000 per
month over the past three months. The unemployment rate, at 4.1 percent, remains low and has
held in a narrow range for the past year. The jobs-to-workers gap has held steady for several
months. Wages are growing faster than inflation and at a more sustainable pace than earlier in
the pandemic recovery. Overall, a wide set of indicators suggests that conditions in the labor
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market are broadly in balance. The labor market is not a source of significant inflationary
pressures. The median projection for the unemployment rate in the SEP is 4.4 percent at the end
of this year and 4.3 percent over the next two years.
Inflation has eased significantly over the past two years but remains somewhat elevated
relative to our 2 percent longer-run goal. Estimates based on the consumer price index and other
data indicate that total PCE prices rose 2.5 percent over the 12 months ending in February and
that, excluding the volatile food and energy categories, core PCE prices rose 2.8 percent. Some
near-term measures of inflation expectations have recently moved up. We see this in both
market- and survey-based measures, and survey respondents, both consumers and businesses, are
mentioning tariffs as a driving factor. Beyond the next year or so, however, most measures of
longer-term expectations remain consistent with our 2 percent inflation goal. The median
projection in the SEP for total PCE inflation is 2.7 percent this year and 2.2 percent next year, a
little higher than projected in December. In 2027, the median projection is at our 2 percent
objective.
Our monetary policy actions are guided by our dual mandate to promote maximum
employment and stable prices for the American people. At today’s meeting, the Committee
decided to maintain the target range for the federal funds rate at 4¼ to 4½ percent. Looking
ahead, the new Administration is in the process of implementing significant policy changes in
four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these
policy changes that will matter for the economy and for the path of monetary policy. While there
have been recent developments in some of these areas, especially trade policy, uncertainty
around the changes and their effects on the economic outlook is high. As we parse the incoming
information, we’re focused on separating the signal from the noise as the outlook evolves. As
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we say in our statement, in considering the extent and timing of additional adjustments to the
target range for the federal funds rate, the Committee will assess incoming data, the evolving
outlook, and the balance of risks. We do not need to be in a hurry to adjust our policy stance,
and we are well positioned to wait for greater clarity.
In our SEP, FOMC participants wrote down their individual assessments of an
appropriate path for the federal funds rate, based on what each participant judges to be the most
likely scenario going forward—an admittedly challenging exercise at this time in light of
considerable uncertainty. The median participant projects that the appropriate level of the
federal funds rate will be 3.9 percent at the end of this year and 3.4 percent at the end of next
year, unchanged from December. While these individual forecasts are always subject to
uncertainty, as I noted, uncertainty today is unusually elevated. And, of course, these projections
are not a Committee plan or a decision.
Policy is not on a preset course. As the economy evolves, we will adjust our policy
stance in a manner that best promotes our maximum-employment and price-stability goals. If
the economy remains strong and inflation does not continue to move sustainably toward
2 percent, we can maintain policy restraint for longer. If the labor market were to weaken
unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy
accordingly. Our current policy stance is well positioned to deal with the risks and uncertainties
that we face in pursuing both sides of our dual mandate.
At today’s meeting, we also decided to slow the pace of decline in our balance sheet.
Since we began balance sheet runoff, our securities holdings have declined by more than $2
trillion. While market indicators continue to suggest that the quantity of reserves remains
abundant, we have seen some signs of increased tightness in money markets. Beginning in
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April, the monthly cap on Treasury redemptions will be lowered from $25 billion to $5 billion.
Consistent with the Committee’s intention to hold primarily Treasury securities in the longer run,
we are leaving the cap on agency securities unchanged. This action has no implications for our
intended stance of monetary policy and should not affect the size of our balance sheet over the
medium term.
The Committee also continued its discussions as part of our five-year review of our
monetary policy framework. At this meeting, we focused on labor market dynamics and our
maximum-employment goal. As we have indicated, our review will include outreach and public
events involving a wide range of parties, including Fed Listens events around the country and a
research conference in May. Throughout this process, we will be open to new ideas and critical
feedback, and we will take on board lessons of the last five years in determining our findings.
We intend to wrap up the review by late summer.
The Fed has been assigned two goals for monetary policy: maximum employment and
stable prices. We remain committed to supporting maximum employment, bringing inflation
sustainably to our 2 percent goal, and keeping longer-term inflation expectations well
anchored. Our success in delivering on these goals matters to all Americans. We understand
that our actions affect communities, families, and businesses across the country. Everything we
do is in service to our public mission. We at the Fed will do everything we can to achieve our
maximum-employment and price-stability goals.
Thank you. I will look forward to your questions.
MICHELLE SMITH. Howard.
HOWARD SCHNEIDER. Howard Schneider with Reuters. Thanks for your time. So
two things on sort of the real side here, one inflation and then—and then GDP. How much of the
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higher inflation forecast for this year is due to tariffs, and since the policy path remains the same,
are you effectively reading this as a one-time price-level shock?
CHAIR POWELL. Okay, so how much of it is, is tariffs? So let me say that it is going to
be very difficult to have a precise assessment of how much of inflation is coming from tariffs
and from, from other—and that’s already the case. You may have seen that goods inflation
moved up pretty significantly in the first two months of the year. Trying to track that back to
actual tariff increases, given what was tariffed and what was not—very, very challenging. So
some of it—the, the answer is clearly some of it—a good part of it is, is coming from tariffs. But
we’ll be—we’ll be working, and so will other forecasters, to try to find the best possible way to
separate nontariff inflation from tariff inflation.
In terms of the, the—your, your sort of looking-through question, too soon to say about
that. As, as I’ve mentioned, it, it can be the case that it’s appropriate sometimes to look through
inflation if it’s going to go away quickly without action by, by us, if it’s transitory. And that can
be the case in the case of, of tariff inflation. I think that would depend on the, the tariff inflation
moving through fairly quickly and would depend critically, as well, on inflation expectations
being well anchored—longer-term inflation expectations being well anchored.
HOWARD SCHNEIDER. Well, I, I guess I’m looking at the obvious here—the fact that
the policy path doesn’t change at all and inflation is unchanged in the outyears also. Doesn’t that
imply you all have basically decided that there is no signal here and that it’s just going to—we’re
back to “transitory” again?
CHAIR POWELL. So I think—I think that’s kind of the base case, but, as I said, it’s—
we really can’t know that. We’re going to have to see how things actually, actually work out.
And the fact that there wasn’t much change—I think that’s, that’s partly because, you know, you
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see—you see weaker growth but higher inflation. They kind of offset. And also, frankly, a little
bit of inertia when it—when it comes to changing something in this highly uncertain
environment. You know, you’re—you, you know, I think there is a level of inertia where you
just say, “Maybe I’ll stay where I am.”
MICHELLE SMITH. Colby.
COLBY SMITH. Thank you. Colby Smith with the New York Times. You just
described inflation expectations as well anchored, but has your confidence in that assessment
changed at all, given the increase in certain measures and the high degree of uncertainty
expressed by businesses, households, and forecasters?
CHAIR POWELL. So our inflation expectations—of course, we do monitor inflation
expectations very, very carefully—basically, every source we can find, and, you know—short-
term, long-term, households, businesses, forecasters, market-based. And I think the picture,
broadly, is this: You do see increases widely in short-term inflation expectations. And people
who fill out surveys and answer, you know, questionnaires are pointing to tariffs about that. If
you look—in the survey world, if you look a little further out, you, you really—you really don’t
see much in the way of an increased longer-term inflation—inflation expectations are mostly
well anchored, if you look at the [series maintained by the Federal Reserve Bank of] New York,
for example. Then you have market based, and it’s the same pattern. You know, people and
markets are pricing in and, and breakevens, some higher inflation over the next year must be
related to tariffs. We know from the surveys. But if you look out five years or five-year, five-
year forward, you’ll see that breakevens have—are either flat or, actually, slightly down in the
case of a longer-term one.
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So we look at that, and we will be watching all of it very, very carefully. We do not take
anything for granted. That’s at the very heart of our framework: anchored inflation
expectations. But what—that’s what you see right now.
COLBY SMITH. And, and how much weight do you put on the deterioration in
consumer confidence surveys? You said recently that this is perhaps not the best indication of
future spending. But I’m curious, you know, what you think is behind this deterioration and, and
to what extent it could be a leading indicator for hard data.
CHAIR POWELL. So let’s start with the hard data. You know, we, we do see pretty
solid hard data still. So growth looks like it’s maybe moderating a bit, consumer spending
moderating a bit, but still at a solid pace. Unemployment’s 4.1 percent. Job creation, most
recently, has been at a healthy level. Inflation has started to move up now, we think partly in
response to tariffs, and there may be a delay in further progress over the course of this year. So
that’s the hard data. Overall, it’s a solid picture. The, the survey data, [in the case of] both
household and businesses, show significant rise in uncertainty and significant concerns about
downside risks. So how do we think about that? And that’s—that is the question.
As I mentioned the other day, as you pointed out, the relationship between survey data
and actual economic activity hasn’t been very tight. There have been plenty of times where
people are saying very down—downbeat things about the economy and then going out and
buying a new car. But we don’t know that that will be the case here. We will be watching very
carefully for signs of weakness in the real data. Of course we will. But I, I—you know, given
where we are, we think our policy’s in a good place to react to, to what comes. And we think
that the right thing to do is, is to wait here for, you know, for greater clarity about, about what,
what the economy’s doing.
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MICHELLE SMITH. Nick.
NICK TIMIRAOS. Nick Timiraos, the Wall Street Journal. Chair Powell, Chair
Greenspan once defined price stability as, as an environment in which inflation is so low and
stable over time that it doesn’t materially enter into the decisions of households and firms. Can
you say that today we have that price stability—that households and businesses are ignoring
price growth, or do you see, by an advanced psychology, big changes in inventories and surveys
that show consumers, at least in the short run, expect higher inflation?
CHAIR POWELL. So I, I do like that definition a lot. In fact, I used it at the recent
conference where I spoke. So I think a world where, where people can make their daily
economic decisions, and businesses, and they’re not having to think about the possibility of
significantly high inflation—we know inflation will bounce around. That’s, that is price
stability. You know, I think we were getting closer and closer to that. I wouldn’t say we were at
that. Inflation was running around 2½ percent for some time. I do think with the arrival of, of
the tariff inflation, further progress may be delayed, if the SEP doesn’t really show further
downward progress on inflation this year. And that, that’s really due to the tariffs coming in.
So, delayed, but if you look at our forecast, we do see ourselves getting back into the low 2s in
’26 and then down to 2 [percent] by ’27—of course, highly uncertain. So I see progress having,
having been made toward that, and then progress in the future. I think that progress is probably
delayed for the time being.
NICK TIMIRAOS. If that’s the case, why are there cuts in the SEP for 2025?
CHAIR POWELL. So, again, people wrote down two cuts the last time, and they look
at—they look at the—you know, the—and they wrote down, you know, meaningful decline in
growth out from 2.1 to 1.7 in 2025, a tick up in the unemployment rate, so not much there, but
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core inflation up by three-tenths. And so those two kind of—those kind of balance each other
out. So people—not everybody, but, on balance, people wrote down similar numbers. The
changes aren’t that big.
The other—the other factor, though, as I mentioned, is just really high uncertainty. What
would you write down? I mean, it’s just—it’s really hard to know how this is going to work out.
And, again, we think our policy’s in a good place. We think it’s a good place where we can
move in the direction that—where we need to. But in the meantime, we, we—it’s, it’s really
appropriate to wait for further clarity, and, of course, you know, the costs of doing that, given
that the economy is still solid, are very low.
MICHELLE SMITH. Edward.
EDWARD LAWRENCE. Thank you, Mr. Chairman. Edward Lawrence with Fox
Business. So with near 4 percent unemployment rate, that should be low enough to bring people
in from the sidelines in terms of hiring. But we’re seeing the hiring rates have been stuck at
2023, 2024 levels. So, what’s going on there?
CHAIR POWELL. Yeah, so that’s a feature of the—has been for some time, a feature of
this labor market. You have pretty high participation, accounting for aging. You’ve got wages
that are consistent with 2 percent inflation, assuming that we’re going to keep getting, you know,
relatively high productivity. We’ve got unemployment, you know, pretty close to its natural
level. But job—the hiring rate is quite low, but so is the layoff rate. So the, the—you look at
initial claims or layoffs. So you’re not seeing people losing their jobs, but you’re seeing that
people who don’t have a job having to wait longer and longer. And, you know, the question is,
which way does that break? If we were to see a meaningful increase in layoffs, then that would
probably translate fairly quickly into unemployment, because people are—you know, it’s, it’s
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not a—it’s not a big hiring market. We’ve been watching that, and it’s just not in the data. It
hasn’t happened. What we’ve had is, is a low-firing, low-hiring situation, and it seems to be in
balance now for, you know, for the last six, seven, eight months. That’s where we are. There’s
healthy levels of job creation, too. So, overall, it’s a labor market that’s in balance, and, you
know, we, we watch it very carefully.
EDWARD LAWRENCE. So then, have we seen the Administration—the new
Administration’s policies in the economic numbers yet? And when do you anticipate that
happening?
CHAIR POWELL. In labor? Or in, in other—?
EDWARD LAWRENCE. In labor and inflation, just across the economy. Have we
started to see the new policies take effect in the numbers?
CHAIR POWELL. I, you know, only in a—kind of an early way. I mean, it’s only been
a few months, right? You know, for example, the, the layoffs that are happening here are, you
know, they’re certainly meaningful to the people involved, and they may be meaningful to a
particular neighborhood or region or area, but at the national level, they’re not—they’re not
significant yet. But we don’t know. We don’t know what—where that—how far that will go.
We’ll, we’ll find out much more.
I mentioned that—you, you saw it—we’ve had two, two very strong goods inflation
readings in the last two months, which is very unexpected, and, I think, hard to trace it to specific
tariffs. But it must have—it must have something to do with—it’s either noise and it’ll come
back, and that—that’s very possible, too. But if it is persistent, then it must be to do with, you
know, people buying ahead of tariffs, or raising prices ahead of tariffs, and things like that.
That—those kinds of things happen, and they’re very, very hard to capture because so much of it
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is indirect. A great example is there—washing machines were tariffed in the last, last round of
tariffs, and prices went up, but prices also went up on, on dryers, which were not tariffed. So the
manufacturers just, you know, they just kind of followed the crowd and, and raised it. So things
happen very indirectly, and so there’ll be a lot of work done in the coming months to, to try to
trace all that through. But, ultimately, though, it’s too soon to be seeing significant effects in
economic data.
MICHELLE SMITH. Craig.
CRAIG TORRES. Craig Torres from Bloomberg News. Thanks, Chair Powell. You
said transitory price increases from tariffs are the base case—transitory is the base case. Wasn’t
it the base case last time? And didn’t the FOMC forecast lower inflation ahead last time? And
wasn’t the lesson that it quickly got into services, haircuts, daycare, everything else? And so I’m
just wondering why the nine aren’t taking that on board and are cutting twice this year.
CHAIR POWELL. When you say “last time,” are you talking about the last—
CRAIG TORRES. Pandemic, yes—during the pandemic.
CHAIR POWELL. You could have been talking about the last time there were tariffs.
CRAIG TORRES. Okay.
CHAIR POWELL. In which case, the inflation was, was transitory.
CRAIG TORRES. Yeah.
CHAIR POWELL. Yeah. No—of course, we’re well aware of that. And, you know,
it’s, it’s still the truth, if, if there’s an inflationary impulse that’s going to go away on its own, it’s
not the right policy to, to tighten policy, because by the time you have your effect, you’re—you
know, you’re—an effect that by—by design, you are lowering economic activity and
employment. And if that’s not necessary, you don’t want to do it. In real time, as we know, it’s
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hard to make that judgment. So—and, and we’re well aware, you know, of what happened,
obviously, with, with the pandemic inflation. But, I mean, we have to look at this as a—as a
different situation. There’s, there are differences and similarities. I mean, it’s a different time.
You know, we haven’t had real price stability fully reestablished yet, and we have to keep that in
mind. And, you know, we also have—we hear that people are very reluctant to take on—to, you
know, to, to allow prices to go up. At the same time, we hear that businesses are intending to
pass many of these prices through. So it’s hard to say how this is going to work out.
MICHELLE SMITH. Steve.
STEVE LIESMAN. Steve, Steve Liesman, CNBC. Thanks for taking my question,
Mr. Chairman. The Bank of Canada in its last policy statement said, “Monetary policy cannot
offset the impacts of a trade war. What it can and must do is ensure that higher prices do not
lead to ongoing inflation.” I wonder if that kind of reflects your own sense of prioritization,
faced with higher prices and weaker growth—that the idea is, you have to take care of inflation.
CHAIR POWELL. You know—so we, we have two goals, right? We have maximum
employment and price stability, and we have to balance those. And, you know, there can be
situations in which they are in tension, right? And we have, actually have a provision in our—in
our consensus statement that says what we should do in that case. That’s a very challenging, you
know, situation for, for any central bank, and certainly for us. And so, what we say that we’ll do
is, we’ll, we’ll look how far each of those two goals is—each of those two measures is from its
goal, and then we’ll ask how long we think it might take to get back to the goal for each of them,
and we’ll make a judgment, because our, you know, our tools work in one direction. We’re
either tightening or loosening. So it’s a very challenging situation. Let me say, we don’t have
that situation right now. That’s not what the—that’s not where the economy is at all. It’s also
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not where the forecast is. I don’t know any mainstream forecast that really shows significant
problems like that, so—
STEVE LIESMAN. Well, just to follow up, yesterday the UCLA Anderson Forecast said
there’s—a high probability of a recession. Where, where do you stand on whether or not the
slowdown you’re seeing creates a higher probability or concern that you may have on recession?
Thank you.
CHAIR POWELL. You know, there’s always an unconditional probability—possibility
of, of a recession. It might be broadly in the range of one in four at any time, if you look back
through, through the years. It—there could be, within 12 months, a one in four chance of a
recession. So the question is, is whether that—whether this current situation, those possibilities
are elevated. I will say this: We don’t—we don’t make such a forecast. If you look at outside
forecasts, forecasters have, have generally raised—a number of them have raised their possibility
of a—of a recession somewhat, but still at relatively moderate levels—you know, still in the
region of, of the traditional, because they were extremely low. If you go back two months,
people were saying that the, the likelihood of a recession was extremely low. So, has moved up,
but it’s not high.
MICHELLE SMITH. Chris.
CHRISTOPHER RUGABER. Hi. Thank you. Chris Rugaber at Associated Press. As
you know, I guess, last night the—President Trump fired two members of the Federal Trade
Commission, an independent agency, and this could cause the kind of legal fight about the
Administration’s power to fire independent people. If those firings stand, is that a threat to the
Fed’s independence? Could he do the same thing to the Fed Board?
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CHAIR POWELL. So I think I, I did answer that question in this very room some time
ago, and I, I [have] no desire to change that answer and have nothing new for you on that today.
CHRISTOPHER RUGABER. Well, I just—okay, well, maybe I’ll have another
mulligan. [Laughter] As you know, I, I wanted to go back to the consumer sentiment,
particularly the inflation expectations in the University of Michigan survey. In the summer of
2022, you cited the rise in the long-term inflation expectations in that index as the reason that
you went big with a three-quarter-point hike. So I know you’ve—I mean, you’ve talked about
all the different measures now, but you seem to not be placing the same weight on that. And so
I’m just wondering, are you dismissing that, what we saw last week from the University of
Michigan, or does that carry the same weight as it did in the past?
CHAIR POWELL. So I, I mentioned it back then, but in no way did I place a huge
weight on it. I think it, it—that was an ex post story, but it wasn’t the case. That was a
preliminary reading, and so is this. And it’s also—this is—that, that Michigan, the one you’re
referring to, the longer-term thing—you know, we look at it, and we don’t dismiss data that we
don’t like. We, we force ourselves to look at it. But it is an outlier compared to market-based
and compared to other survey-based assessments of longer-run inflation expectations, so we’ve
got to keep that in mind. And I, I—again, I, I would just say, we look at—we look at all of them.
And that one—that one’s kind of an outlier, but, you know, nonetheless, we, we take notice of it.
CHRISTOPHER RUGABER. Thank you.
MICHELLE SMITH. Michael.
MICHAEL MCKEE. Michael McKee from Bloomberg Radio and Television. There is a
worry on Wall Street that when you say you want to study the net effect of the fiscal policies, we
may see on the economy that you would end up waiting too long and be “behind the curve” in
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responding to any downturn. How can you reassure people that you can spot a problem early
enough, unless you decide to be preemptive?
CHAIR POWELL. Yeah, look, we’re, we’re aware of the—we’re well aware of how
things are going to evolve and the time frames and all that, and, you know, we will—we will use
our tools to foster achievement of our goals to the—to the best we can. And, of course, we’re
going to try to be timely with that. For right now, the hard data are pretty solid. We, we are
obviously aware of the soft sentiment data and high uncertainty, and we’re watching that
carefully. And we think it’s a, a good time for us to wait for further clarity before we consider
adjusting our, our policy stance.
MICHAEL MCKEE. Do you think it’s going to be hard to get clarity in a “government
by ”? I mean, do you have a, a feeling that at some point you actually will have a forecast
you can trust?
CHAIR POWELL. Yes, I think we will. I just—it’s hard to say when that will be. You
know, we’re—these decisions are going to be made, and they’re going to be implemented, and
then we’ll know. At that point, we’ll know what the decisions are, and we’ll have to make
assessments then about their, their implications for the economy. Those things will happen. A
lot of them will happen over the course of, you know, in coming months, certainly over the
course of this year, and we’ll be adapting as we go.
MICHELLE SMITH. Rachel.
RACHEL SIEGEL. Hi, Chair Powell. Rachel Siegel from the Washington Post. Thank
you for taking our questions. At the beginning, you were talking about separating the signal
from the noise, and tariff inflation from nontariff inflation. Can you “walk us through” what that
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looked like over the last couple of months—if there were specifics, from the January meeting to
now, that helped you make those distinctions?
CHAIR POWELL. So when we say “separating the signal from the noise,” that’s just a
way of saying that things are highly uncertain and that, you know, you’re reading about
developments—the news is full of developments of tariffs being put on and taken off and things
like that. That’s—some of that is noise in the sense that it’s, it’s not really telling you anything.
You’re trying to extract a signal from that, and the signal is what’s going to be the effect on
economic activity, on inflation, on employment, and all those things. So, so that’s really when
we say “signal and noise.”
Sorry, the second thing was—?
RACHEL SIEGEL. Or, similarly for tariff inflation, nontariff inflation, ways that you’re
making the distinction.
CHAIR POWELL. That’s, that’s sort of a, a special case of that—of, you know, with the
idea being—and I think—do think that the first two months of this year are a great example.
You’ve got high readings for goods inflation after a string of readings that averaged close to
zero, and you have to ask—it’s coming during tariffs, but, you know, you—it’s very hard to,
actually, scientifically go back and match up those increases and say, “Yes, I can prove that
that’s from tariffs.” But it kind of has to be, to some extent. Plus, noise. There can be
idiosyncratic readings in various categories, which will shortly reverse, and that, that happens,
too, and that could be a big piece of it. You know, I think we’ll know. In a couple of months,
we’ll know whether those were—you know, where that really was from. But it’s a—that’s
another case where I think it’s going to be very, very challenging to unpack the inflation that we
see over the course of this year and be able to say with confidence how much of that came from
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inflation and how much of it—sorry, from tariffs—and how much of it didn’t. But that’s what
we’ll be doing. We’ll be doing that, and so will everybody else, and we’ll all be trying very hard
to, to make that assessment. And, you know, I, I’m sure we will make a lot of progress on that.
And we already have. But it, it’s going to be a challenge.
RACHEL SIEGEL. Do you have a sense yet as to what, in your mind, what makes
something cross from noise to a signal—what that threshold would look like?
CHAIR POWELL. You know, it would depend on what we’re talking about. I mean,
obviously, you’re looking for direct evidence that, that particular pieces of, of inflation are, are—
or are clearly not—caused by tariffs. For example, something that was, you know, in the service
sector that was far away from anything that’s tariffed. You, you might think, okay, well that is—
like, frankly, housing services inflation—which, which, by the way, has been behaving well.
You know—which, for, for some time, was kind of our problem. Now it’s been—it’s slow, but
it’s definitely, you know, moving down in a—in a very good way. It’s more now with goods
and, to some extent, with, with nonhousing services inflation.
MICHELLE SMITH. Kelly.
KELLY O’GRADY. Thanks for taking our questions, Chair Powell. Kelly O’Grady,
CBS News. So consumer sentiment has dipped dramatically, but you say the economy and the
hard data is still solid. What is your message to consumers that clearly disagree and don’t feel
that strength? Because the hard data they’re looking at is their grocery bill.
CHAIR POWELL. Okay, so a couple things. The grocery bill is about, about past
inflation, really. There was inflation in ’21, ’22, and ’23, and prices went up. The current
level—it’s not the change in prices. It’s, they’re unhappy—and, and they’re not wrong to be
unhappy—that prices went up quite a bit, and they’re paying a lot for those things. So that’s—I
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think that is the fundamental fact and has been for a long time—a couple years—why people are
unhappy with the—with the economy. It’s not that the economy’s not growing. It’s not that
inflation’s really high. It’s not that unemployment is high. It’s none of those things. We have,
you know, 4.1 percent unemployment. We’ve got 2 percent growth, and, you know, it’s, it’s a
pretty good economy. But people are unhappy because of the price level. And, and I do—we
completely understand and accept that.
KELLY O’GRADY. And just to follow up: Why are you still projecting two rate cuts
this year if your own projections show inflation higher for longer? Does that mean you see a
slowdown in economic growth as a real threat?
CHAIR POWELL. So I, I think if you—yeah, I mean, remember, we came into this
with—at the December meeting, and the median was two cuts, the median was. And so you
come in, and you see, broadly speaking, weaker growth but higher inflation. And they kind of
balance each other out, so you think—and, and unemployment is really, really only, only a one-
tenth change. So it’s—there’s just not a big change in the forecast. There really isn’t. Modest,
you know, meaningfully higher growth and meaningfully higher inflation, which call for
different responses, right? So they cancel each other out, and people just said, “Okay, I’m going
to stay here.”
But the second factor is, it’s so highly uncertain. Is just—you know, we’re sitting here
thinking—and we, we obviously are in, in touch with businesses and households all over the
country. We have an extraordinary network of contacts that come in through the Reserve Banks
and put it in the Beige Book—and also through contacts at the Board. And we get all that, and
we, we do understand that sentiment has fallen off pretty sharply, but economic activity has not
yet. And so we’re watching carefully. So I would tell people that the economy seems to be—
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seems to be healthy. We understand that, that sentiment is, is quite negative at this time, and that
probably has to do with, you know, turmoil at the beginning of an Administration. It’s making,
you know, big changes in, in areas of policy, and that’s probably part of it. I do think the
underlying unhappiness people have about the economy, though, is more—is more about the
price level.
MICHELLE SMITH. Victoria.
VICTORIA GUIDA. Hi. Victoria Guida with Politico. I wanted to ask, first of all, if
you could clarify. You were talking about how tariffs were a good part of the uptick in the
inflation forecasts, and I was just wondering what that specifically refers to. Is that the tariffs
that have already been put in place? Is that anticipating some of the tariffs that might be coming
on April 2? And then also, if you wouldn’t mind talking a little more about the balance sheet
decision and what drove that. Did that have anything to do with expectations of how the debt
ceiling—raising the debt ceiling might affect the reserve supply?
CHAIR POWELL. Yeah, so, in the SEP, you’ll see that there’s not further progress on
core inflation this year. We’re kind of side flatlining, going sideways. We don’t ask people to
say—to write down how much of this is from tariffs and how much of it is not. But some of it is
from tariffs. We know that tariffs are coming, and we know that they’re probably already—all,
all forecasters have tariff inflation affecting core PCE inflation [and] core CPI inflation this year,
without exception. I’m not aware of an exception. So it’s in there. I can’t tell you how much of
that it is.
In terms of the balance sheet—so, yeah, we—I think—I guess the way I’d say it is, you
know, it was the flows in and out of the, the TGA that got us thinking about it, but as we, you
know, as we thought about it, we really came to the view that this was a good time to, to make
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the move that we made. And, broadly, Committee came around—came around to the view that
we, we would do the same thing we’d already done, which is, once we—I guess in June, we—
was it June? Whenever it was, we, we lowered the pace of QT, and we’re just going to do that
again. We’re going to cut it roughly in half. And the sense of that is, if you’re cutting the pace
of QT roughly in half, then the runway is probably doubled, okay? So it’s going—it’s going to
be slower for longer. And people really liked that. People thought, “That’s, that’s a good idea.”
You know, it’s like a plane. You can think of it like a plane coming in for a landing. As we get
closer and we—by the way, we still think that reserves are abundant, although you begin to see
some of the—some of the things we look at begin to react a little bit, but we still think that
they’re abundant. And, of course, now, the TGA is emptying out, so reserves are, are higher
now, so you can’t really see the underlying signal. So we came around to the view, and, and it
had a lot of appeal, and so we did it. It really—it has no implications at all for monetary policy.
It has no implications at all for the ultimate size of the balance sheet. It isn’t sending a signal in
any hidden way that you can try to tease out. It’s just not there. We’re, we’re basically—it’s
very consistent with our plans and our practices that we’ve published and that we’ve followed
since we began this—what is a very successful, you know, rundown of the balance sheet. Again,
[this is] the second time that we’ve slowed the pace. And we’ve said that we would stop when
we were somewhat above the level [of reserves] we judge as ample. And, clearly, we’re not at
that level yet, but we’re going to be approaching it more slowly. It’s a commonsense kind of a—
kind of a thing, and it had—it had pretty broad appeal, I will say.
MICHELLE SMITH. Claire.
CLAIRE JONES. Claire Jones, Financial Times. You said in January, Chair Powell,
that inflation expectations remained well anchored. Would you still say they remain well
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anchored today? And just to reiterate the question others have asked, if they’re not so well
anchored, why hasn’t there been a more radical shift to the policy path today? Thank you.
CHAIR POWELL. So when we—when we talk about inflation expectations being well
anchored, we’re talking about longer-run inflation expectations. And they really haven’t moved
much, I mean, if at all. There, there’s one reading that everyone’s focusing on that’s higher, but
the other survey readings and the market-based readings all show relatively, you know, well-
anchored inflation expectations. You would expect that expectations of inflation over the course
of a year would move around, because conditions change, and in this case, we have tariffs
coming in. We don’t know how big, what’s—there’s so many things we don’t know, but we
kind of know there are going to be tariffs, and they tend to bring growth down. They tend to
bring inflation up at the—in the first instance. So, so I would say, you, you know, I’m not
dismissing what we’re seeing in short-term inflation expectations. We, as I mentioned, follow
that very carefully. But when we say expectations are well anchored, we’re really looking at,
you know, longer term, five year and out, and there’s really no story to tell five years and out,
either in market based or, or in surveys. But we keep—we’ll watch it. I mean, we’re not, you
know, we’re, we’re not going to miss any evidence that longer-term or medium-term inflation
expectations are, are moving.
MICHELLE SMITH. Neil.
NEIL IRWIN. Hi, Chair Powell. Neil Irwin with Axios. Treasury Secretary Bessent has
observed that a large share of job growth over the last couple of years has been in what he calls
government or government-adjacent sectors—health care, education. Do you agree that there’s
some weakness in underlying private job growth, and do you see the composition of job growth
as something that has policy implications?
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CHAIR POWELL. So that, that has been the case. We talked about that over the course
of the last year. There were—there were some good number of months and times when a lot of
the job creation was, was concentrated in, you know, educational institutions, health care, state
governments, things like that. There were also times when private-sector job growth has been
moving, moving in a healthy frame—and they’re all—they’re all jobs, but—and remember,
we’re, you know, we’re at very low unemployment for, you know, for, for quite a time now. So
I, I think it’s a good labor market, but it’s—look, it’s something that we monitor carefully. From
our standpoint, employment is employment. But I, you know—the, the elected government is
entitled to have—you know, we, we don’t have policies that address different kinds of
employment. But, but the elected government has a—has a different role, and they can—they,
they can have those.
NEIL IRWIN. True. Quick QT question: Does the Committee envision at some point
tapering the MBS runoff, runoff as well?
CHAIR POWELL. I think tapering it—I, I don’t know. There’s no plan to do that. You
know, at a certain point, we’ll stop runoff. And we may or may not stop MBS runoff, though,
because, you know, we can—we can—we, we want to stop runoff in net at some point. We
haven’t made any decisions about that, but, you know, we, we want the—we want the MBS to
roll off our balance sheet. We really, strongly desire that, so—but we haven’t made any
decisions about that, you know. We, we will—we—I think we’d, we’d look carefully at letting
that keep going, but hold the overall size of the balance sheet in, you know, constant, at some
point—a point that we’re not at yet.
MICHELLE SMITH. Simon.
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SIMON RABINOVITCH. Simon Rabinovitch with the Economist. Thank you, Chair
Powell. Several times today, you’ve said that you feel you’re well positioned to wait for greater
clarity. At the same time, you could point to quite a few growth risks at the moment. We’ve
seen a stock market that’s gone quite wobbly, rapidly cooling housing sales, plunging confidence
surveys. Today, not only did the SEP mark down the growth outlook, 17 of 19 see risks to the
downside. So my question is, how confident are you that you’re well positioned? Or is that one
more thing that you’re uncertain about?
CHAIR POWELL. I’m confident that we’re well positioned in the sense that we’re,
we’re well positioned to move in the direction we’ll need to move. I, I mean, I, I don’t know
anyone who has a lot of confidence in their forecast. I mean, the point is, we are—we are at, you
know, we’re at a place where we can cut or we—or we can hold what is a clearly a restrictive
stance of policy. And that’s what I mean. I, I mean, I think we’re—that’s well positioned.
Forecasting right now, it’s—you know, forecasting is always very, very hard, and in the current
situation, I just think it’s—uncertainty is, you know, remarkably high.
SIMON RABINOVITCH. And, sorry, standing here today, would you be surprised to, to
pivot back towards rate cuts in May?
CHAIR POWELL. I, like, I, I think we’re not going to be in any hurry to move. And, as
I mentioned, I think we’re, we’re well positioned to wait for further clarity, and not in any hurry.
MICHELLE SMITH. Matt Egan.
MATT EGAN. Matt Egan with CNN. Thank you, Chair Powell. The Fed’s statement
released today removed the line that previously said “the Committee judges that the risks to
achieving its employment and inflation goals are roughly in balance.” Can you explain the
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decision to remove that line? Does it mean that you’re now more concerned about inflation or
about employment?
CHAIR POWELL. Actually, it does not mean either of those things. You know,
sometimes with language they—it, it lives its, its useful life, and then we take it off, and we—
and, and that was the case there. There’s really not meant to be any signal here. Over the past
year, you know, conveying this sense of the balance of risks was important that they be in
balance or close to being in balance. That was useful as we approach liftoff, if you remember.
But we’re past that. Or, I’m sorry, no—beginning, beginning to cut. So we just—so we just
took it out. I, I actually would say that the more important thing now about risks—and this is in,
in pages like 10, 11, 12 of the SEP—if you look, participants widely raised their estimate of, of
the risks to our—of uncertainty, but also of the risks to growth in our employment and inflation
mandates. That’s, that’s a more salient point now than whether they’re—whether they’re in
MATT EGAN. Just on the, the stock market, the stock market has obviously declined
significantly since the Fed last met. Are you concerned at all about some of the market volatility
having a real economic impact in terms of hurting business spending or consumer spending,
especially among higher-income households?
CHAIR POWELL. So financial conditions matter to us because, you know, financial
conditions are the main channel to the real economy through which our policy has its effect. So,
so they’re important. But what matters from, from a Fed standpoint for the macroeconomy is
material changes to overall financial conditions that are persistent, that last for a while—long
enough to actually affect economic activity. So that’s what we’re looking for. I, I’m not going
to opine on the appropriate level of any market—equity, debt, commodities, or anything like that.
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And I would just point you to the—to the bigger picture again. You know, the, the real
economy, the, the hard data are still in, in reasonably good shape. It’s the soft data—it’s the
surveys that are showing, you know, significant concerns, downside risks, and those kind of
things. We don’t dismiss that. We’re watching it carefully, but, you know, we, we don’t want to
get ahead of that. You know, we, we want to focus on the hard data. This—if it’s—if that’s
going to affect the hard data, we should know it very quickly, and, and, of course, we’ll, we’ll
understand that. But you don’t see that yet.
MICHELLE SMITH. Jennifer.
JENNIFER SCHONBERGER. Thank you, Chair Powell. Jennifer Schonberger with
Yahoo Finance. As you look to navigate higher inflation and lower growth, the Fed has talked
about heeding the lessons from the 1970s. Is the Fed willing to have a recession if it means
breaking the back of inflation?
CHAIR POWELL. Well, fortunately, we’re in a situation where we have seen inflation
move down from, you know, higher levels to pretty close to 2 percent, while the unemployment
rate has remained very consistent with full employment, 4.1 percent. So we now have inflation
coming in from an exogenous source, but the underlying inflationary picture before that was, you
know, basically 2½ percent inflation, I would say, and 2 percent growth, and 4 percent
unemployment. So, so that’s what—that’s what we did. That’s what, together, the economy
accomplished. So I don’t see any reason to think that we’re looking at, at a replay of the ’70s or
anything like that. You know, inflation—underlying inflation is, is, you know, still running in
the 2s, with probably a little bit of a pickup associated with tariffs. So I, I don’t think we’re
facing—I, I wouldn’t say we’re in, in a situation that’s remotely comparable to that.
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JENNIFER SCHONBERGER. And last month, the idea of a DOGE dividend was
proposed, which would send $5,000 checks to every taxpayer from DOGE savings. President
Trump and Elon Musk have supported this. There’s reports there could be a bill introduced on
Capitol Hill. What impact might that have on household savings and spending in terms of your
growth and, and outlook for inflation?
CHAIR POWELL. You know, I—it’s not—it’s not appropriate for me to speculate on
political ideas or, or fiscal policy, for that matter. So I’m going to—I’m going to pass on that
one. Thank you.
MICHELLE SMITH. Daniel.
DANIEL AVIS. Hi, Chair Powell. Daniel Avis from Agence France-Presse. You
mentioned that tariffs are already having at least some impact on inflation. I’m just wondering
how you and your colleagues on the FOMC have been thinking about the possibility of
retaliatory tariffs from other countries, especially with April 2 coming up. Was it something you
considered during this meeting? Thanks.
CHAIR POWELL. So, since the very beginning, we’ve had kind of a placeholder—the
staff has a placeholder of—range of—really a range of possible outcomes from tariffs, and from
trade policy generally. And they generally assume full retaliation in those. And so that’s, that’s
kind of baked into the numbers. What happens—it will be complicated, and there will be some
retaliation and some not and, and all that, but, ultimately, they’re trying to, with the placeholder,
give us a broad sense of what this might look like. This—when we know—when we actually
know the specifics, we’ll be able to, to have still uncertain but, you know, better-informed
forecasts. So, so, yes, that’s in there.
MICHELLE SMITH. Last question goes to Jean.
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JEAN YUNG. Hi, Chair Powell. Jean Yung with MNI Market News. Had a couple
questions on the balance sheet change that you made. So the minutes had initially described
your discussion on slowing QT as temporary, until the debt ceiling is resolved, but it—from what
you said earlier, doesn’t sound like there’s a desire to kind of regain the pace of QT that we have
at the moment after the, the debt ceiling is resolved. Is that the case?
CHAIR POWELL. Yeah, so we, we looked at pausing, and we looked at, at slowing,
and, really, people came together very strongly behind slowing, not pausing, for a variety of
reasons. And so people really came to be, you know, pretty strongly in favor of, of this move. It
slows down the path and probably lengthens it—you know, doubles it, effectively, by slowing it
by half. That’s, that’s—people thought that’s, that’s a good place to be. It’ll, it’ll, you know,
help us assure that this path is, is a smooth one as we get closer and closer to that. So that’s how
that came about.
JEAN YUNG. Well, I guess my question is more, was that meant to be a temporary
measure during the debt ceiling episode, or—?
CHAIR POWELL. You know, it was—it was actually—it was the, the TGA flows—
Treasury General Account flows that got us thinking about this. But the more we thought about
it, we came around to this. And, and, you know, it, it is—yes, it was provoked. The original
discussion was provoked by that. But I think what we came up with, though, was broader than
that and different than it. It does address that issue, but it really is also—it fits in really nicely
with our principles and our plans, and the things we’ve done before, and the things we’ve said
we would do. So that’s why I—you know, pretty, pretty strong support. I’d just say it’s, it’s
nothing to do with monetary policy, nothing to do with the size of the balance sheet. It’s just
kind of a commonsense adjustment as you get closer and closer. Let’s slow down a little bit
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again. And, that way, we’ll be more and more confident that we’re getting where we need to get.
You can take your time getting there. You know, we’re shrinking the balance sheet every
month, and we think that’s—we think it was a good play and, as I mentioned, well supported.
Thanks very much.