Federal Reserve press conference, 2023-12-13 — Chair Jerome Powell

Question (Steve Liesman, CNBC): Steve Liesman, CNBC. Happy holidays, Mr. Chairman. Fed Governor Chris Waller said that if inflation continues to fall, then the Fed in the next several months could be cutting interest rates. I wonder if you could comment on whether you agree with Fed Governor Waller on that, that the Fed would become more restrictive if it didn’t cut rates if inflation fell. Thank you, sir.
Answer: So, of course, I don’t comment on, on any other officials, even those who work at the Fed. But I’ll—but I’ll try to answer your question more broadly. So the way— the way we’re looking at it is, is really this. When we started out, right, we said the first question is, how fast to move, and we moved very fast. The second question is, you know, really, how high to raise the policy rate? And that’s really the question that we’re still on here. We’re, we’re very focused on that, as I—as I mentioned. People generally think that we’re at or near that and, and think it’s not likely that we will hike, although they don’t take that possibility off the table. So that’s—when you get to that question, and that’s your answer, there’s a natural—naturally, it begins to be the next question, which is when it will become appropriate to begin dialing back the amount of policy restraint that’s in place. So that’s really the next question, and that’s what people are thinking about and, and talking about. And I would just say this. We are seeing, you know, strong growth that is—that appears to be moderating; we’re seeing a labor market that is coming back into balance by so many measures; and we’re seeing inflation making real progress. These are the things we’ve been wanting to see. We can’t know. We still have a ways to go. No one is declaring victory. That would be premature. And we can’t be guaranteed of this progress [continuing]. So we’re, we’re moving carefully in making that assessment of whether we need to do more or not. And that’s, that’s really the question that we’re on. But, of course, the other question, the question of when will it become appropriate to begin dialing back the amount of policy restraint in place, that, that begins to come into view and is clearly a discussion—topic of discussion out in the world and also a discussion for us at our meeting today.

Question (Nick Timiraos, Wall Street Journal): Nick Timiraos of the Wall Street Journal. Chair Powell, you’ve argued over the last year that policy tightening started before you actually lifted off because the market anticipated your moves and tightened on your behalf. The market is now easing policy on your behalf by anticipating a funds rate by next September that’s a full point below the current level, with cuts beginning around March. Is this something that you are broadly comfortable with?
Answer: So this last year has been remarkable for the, the sort of seesaw thing, the back-and-forth we’ve had over the course of the year of markets moving away and moving back and that kind of thing. So, and what I would just say is that we, we focus on what we have to do and how we need to use our tools to achieve our goals, and that’s what we really focus on. And people are going to have different forecasts about the economy, and they’re going to—those are going to show up in market conditions, or they won’t, you know. But in any case, we have to do what we think is right. And, you know, in the long run, it’s important that financial conditions become aligned or are aligned with what we’re trying to accomplish, and, in the long run, they will be, of course, because we will do what it takes to get to our goals. And, ultimately, that will mean that financial conditions will, will come along. But in the meantime, there can be back-and-forth, and, you know, I’m just focused on what’s the right thing for us to do. And my colleagues are focused on that, too.

Question (Edward Lawrence, Fox Business): And you focused on core inflation, we’ve heard from—in other meetings. How sticky is core inflation right now?
Answer: Well, that’s what we’re finding out, and we’ve, you know, we’ve seen real progress in, in core inflation. It has been sticky, and famously, the service sector is thought to be stickier, but we’ve actually seen reasonable progress in nonhousing services, which was the area where, where you would expect to see less progress. We are seeing some progress there, though. And, in fact, all three of the categories of core [prices] are now contributing: goods, housing services, nonhousing services. They’re all contributing in different—at different levels, you know, meeting by meeting—or, rather, report by report. So, yeah.