Federal Reserve press conference, 2024-05-01 — Chair Jerome Powell

Question (Nicholas Jasinski, Barron's): Thank you, Chair Powell, for taking the questions. This is Nicholas Jasinski from Barron’s Magazine. It seems that over the past three or four years, economies and central banks in developed markets, at least, have been on more or less the same trajectory: easing during the pandemic, fighting inflation with restrictive policy on the way out. It feels like that may be ending in 2024 based on some of the economic data from Europe and the U.S. and Japan and statements from those central banks as well. So my question is, what, what considerations or risks does a period of more divergent global economic trajectories and central bank policies present for the FOMC?
Answer: So that—you’re right. I think that, that may happen, and, you know that we all serve domestic mandates, right? So I think the difference between the United States and other countries that are now considering rate cuts is that they’re just not having the kind of growth we’re having. They have—their inflation is performing about like ours or maybe a little better, but they’re not experiencing the kind of growth we’re experiencing. So we actually have the luxury of having strong growth and a strong labor market, very low unemployment, high job creation, and all of that, and we can be patient. And we will—we’ll be careful and cautious as we approach the decision to cut rates, whereas I think other jurisdictions may go before that. In terms of the implications, you know, I think obviously markets see it coming. It’s priced in now. And so I think the markets and economies can adapt to it. And I think, you know, we haven’t seen—in addition, for the emerging market economies, we haven’t seen the kind of turmoil that was more frequent 20 years ago, 30 years ago. And that’s, I think, partly because emerging market countries, many of them have much better monetary policy frameworks, much more credibility on inflation. And so they’re navigating this pretty well this time.

Question (Jennifer Schonberger, Yahoo Finance): And speaking of dislocations in the labor market: In terms of cutting, you said, if there were weakness in the job market, that could be a reason to cut rates. So if the unemployment rate were to tick above 4 percent but inflation not back down to your 2 percent target, how would you look at that? Would the unemployment rate popping back above 4 percent catch your attention?
Answer: You know, I said “an unexpected weakening” is what I—the way I characterized it. So, you know—and I’m not going to try to define exactly what I mean by that. But, you know, it would be—it would have to be meaningful and get our attention and lead us to think that the labor market was really significantly weakening for us to want to react to it. A couple of tenths in the unemployment rate would be—would probably not do that. But a broader—it would be a broader thing that would—that would suggest that it would be appropriate to consider cutting. I think whether you decide to cut will depend on all the facts and circumstances, not just that one.

Question (Kyle Campbell, American Banker): Chair Powell, thanks for taking the question. Kyle Campbell with American Banker. You’ve said that broad and material changes are needed for the Basel III Endgame proposal, and you’ve mentioned that a re-proposal is something that’s on the table. As you’ve had more time to sort of sit with the public commentary, process that, and understand the options available to you, do you have a better sense of whether a re-proposal will be necessary, and do you have a timeline in mind for when, you know, some sort of movement will be made on that front—either a re-proposal or a move to finalize?
Answer: So let me—let me start by saying that the Fed is committed to, you know, completing this process and carrying out Basel III Endgame in a way that’s faithful to Basel and also comparable to what the other large comparable jurisdictions are doing. We haven’t made any decisions on, on policy or on process at all. Nothing. Nothing. No decisions have been made. I’ll say again, though, if we conclude that re-proposal is appropriate, we won’t hesitate to insist on that.