Federal Reserve press conference, 2019-03-20 — Chair Jerome Powell

Question (Paul Kiernan, Dow Jones Newswires): Hi, Chairman Powell. Thanks for the question. Paul Kiernan from Dow Jones Newswires. I’m just kind of curious—I mean, this below-target inflation is a global phenomenon, at least across advanced economies, and I’d just like to kind of hear your thoughts about what kind of challenges that poses to policymakers like yourself and the global economy in general. Yes, thanks.
Answer: It’s a major challenge. It’s one of the major challenges of our time, really, to have inflation—you know, downward pressure on inflation, let’s say. It gives central banks less room to, you know, to respond to downturns, right? So if inflation expectations are below 2 percent, they’re always going to be pulling inflation down, and we’re going to be paddling upstream in trying to, you know, keep inflation at 2 percent, which gives us some room to cut, you know, when it’s time to cut rates when the economy weakens. And, you know, that’s something that central banks face all over the world, and we certainly face that problem too. It’s one of the—one of the things we’re looking into as part of our strategic monetary policy review this year. The proximity to the zero lower bound calls for more creative thinking about ways we can, you know, uphold the credibility of our inflation target, and, you know, we’re open minded about ways we can do that.

Question (Steven Beckner, NPR): Can I just follow up, please? Well, how do you account for the fact that the average maturity has in fact been lengthening and contributing to a flattening of the yield curve? Is that—what’s—what’s causing that?
Answer: I think, isn’t it just that as securities roll off, you wind up investing in—you know, as a 10-year rolls off, you wind up investing in a 10-year, and automatically that lengthens things. It’s not at all a plan to lengthen the balance sheet. It’s just been—we try to have a practice that we don’t deviate from, and it’s transparent, and—no policy message in that.