Federal Reserve press conference, 2025-01-29 — Chair Jerome Powell

Question (Colby Smith, New York Times): And just to follow up: We’ve seen inflation expectations across a number of measures rise sharply—which has, in part, been linked to tariff concerns. But there’s also been this encouraging data that you mentioned in terms of CPI and rent indices. So how would you characterize concerns about upside risks to inflation across the Committee, especially those tied to policies related to the Trump Administration?
Answer: Well I, I’d say you, you see expectations moving up a little bit, at the short end—but not at the longer run, which [is] where it really matters. And those could be related to—could be related to what you mentioned, some of the new policies. I think where the Committee is very much in the mode of waiting to see what policies are enacted. We, and we, we don’t know what will happen with, with tariffs, with immigration, with fiscal policy, and with regulatory policy. We’re only just beginning to see—actually, are not really beginning to see much, and I think we need to—we need to let those policies be articulated before we can even begin to make a, a plausible assessment of what their implications for the economy will be. So we’re going to be watching carefully and, and, as we always do. This is no different than any other set of policy changes at the beginning of a—of an Administration. We’ll patiently watch and understand and, and, you know, kind of not be in a hurry to, to get to a place of understanding what our policy response should be until we see how it plays out.

Question (Edward Lawrence, Fox Business): I want to ask you about Fed employment. I know that tax money is not used here, but Elon Musk alleges that the Fed is, quote, “absurdly overstaffed.” We’ve seen the Executive Branch push to reduce the federal workforce. I just want to get your reaction.
Answer: You know, we, we run a very careful budget process where we’re fully aware that what, that, you know, we owe the—we owe that to the public, and we believe we do that. I, I’ve got no further comment than that, thanks.

Question (Andrew Ackerman, Washington Post): The other thing I wanted to ask was just how far away you think you are from neutral.
Answer: Yeah, you can’t know with any precision, of course. As I like to say, that you know that—you know the neutral rate by its works. So I think, you know, at 4.3 percent we’re, we’re above pretty much everyone on the Committee’s estimates of the longer-run neutral. I think our eyes are telling us that our policy is having the effects on the economy. That’s really the question we ask. You know, you can consult models, empirical models, theoretical models. You really have to just look out the window and see how your—how your policy rate is affecting the economy. And I think we see that it’s having meaningful effects in bringing inflation under control. It has helped bring the labor market into balance as well. So that’s what we think. I, I would say we’re meaningfully above it. I, I am—I, I have no illusion that, that anyone knows precisely how much that is. And, but it, you know—not knowing that, and having cut 100 basis points, means that it’s appropriate that we—that we not be in a hurry to make further adjustments.