Federal Reserve press conference, 2018-12-19 — Chair Jerome Powell

Question (Edward Lawrence, Fox Business): Hi, Edward Lawrence, Fox Business Network. Thank you, Mr. Chairman. We’ve seen enormous volatility in the markets recently. We know the President said, you know, don’t raise interest rates. It’s well documented. The National Association of Realtors’ chief economist says that it’s starting to affect first-time homebuyers with the mortgage rates going up. When do you think these pauses need to come in next year? Do we need to keep this, as you say, gradual? And then, in addition, what data are you specifically looking at for you that shows when the Federal Reserve starts to become that headwind in the economy with the rates?
Answer: You know, we’re watching—we have a strong forecast, generally, for next year. That forecast involves growth, you know, between 2 and 2½ percent. It involves growth at a strong enough level to continue driving unemployment down and inflation near 2 percent. So that’s a pretty positive forecast. So, to make further moves, I’ll be looking for data that suggests that that’s, in fact, the path that we’re on. As I mentioned, once you—once you’re, broadly speaking, in the range of neutral, I think it’s appropriate to be putting aside individual estimates of that and be looking at what the incoming data are telling you about the outlook, updating your estimates of what neutral might be, of what the natural rate of unemployment might be, of the state of the economy, so—and letting that lead you to adjust your outlook and, therefore, your appropriate path for policy. So that’s what we mean when we say we’re “data dependent.” Of course, we’re always data dependent, but I think it has a particular meaning in this context, which is that.