Federal Reserve press conference, 2025-03-19 — Chair Jerome Powell

Question (Edward Lawrence, Fox Business): 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?
Answer: 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 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.

Question (Claire Jones, Financial Times): Claire Jones, Financial Times. You said in January, Chair Powell, that inflation expectations remained well anchored. Would you still say they remain well 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.
Answer: 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.

Question (Simon Rabinovitch, The Economist): 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 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?
Answer: 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.

Question (Jean Yung, MNI): Well, I guess my question is more, was that meant to be a temporary measure during the debt ceiling episode, or—?
Answer: 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 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.