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

Question (Craig Torres, Bloomberg): Craig Torres from Bloomberg News. Thanks, Chair Powell. You said transitory price increases from tariffs are the base case—transitory is the base case. Wasn’t it the base case last time? And didn’t the FOMC forecast lower inflation ahead last time? And wasn’t the lesson that it quickly got into services, haircuts, daycare, everything else? And so I’m just wondering why the nine aren’t taking that on board and are cutting twice this year.
Answer: Yeah. No—of course, we’re well aware of that. And, you know, it’s, it’s still the truth, if, if there’s an inflationary impulse that’s going to go away on its own, it’s not the right policy to, to tighten policy, because by the time you have your effect, you’re—you know, you’re—an effect that by—by design, you are lowering economic activity and employment. And if that’s not necessary, you don’t want to do it. In real time, as we know, it’s hard to make that judgment. So—and, and we’re well aware, you know, of what happened, obviously, with, with the pandemic inflation. But, I mean, we have to look at this as a—as a different situation. There’s, there are differences and similarities. I mean, it’s a different time. You know, we haven’t had real price stability fully reestablished yet, and we have to keep that in mind. And, you know, we also have—we hear that people are very reluctant to take on—to, you know, to, to allow prices to go up. At the same time, we hear that businesses are intending to pass many of these prices through. So it’s hard to say how this is going to work out.

Question (Rachel Siegel, Washington Post): Do you have a sense yet as to what, in your mind, what makes something cross from noise to a signal—what that threshold would look like?
Answer: You know, it would depend on what we’re talking about. I mean, obviously, you’re looking for direct evidence that, that particular pieces of, of inflation are, are— or are clearly not—caused by tariffs. For example, something that was, you know, in the service sector that was far away from anything that’s tariffed. You, you might think, okay, well that is— like, frankly, housing services inflation—which, which, by the way, has been behaving well. You know—which, for, for some time, was kind of our problem. Now it’s been—it’s slow, but it’s definitely, you know, moving down in a—in a very good way. It’s more now with goods and, to some extent, with, with nonhousing services inflation.

Question (Kelly O’Grady, nan): Thanks for taking our questions, Chair Powell. Kelly O’Grady, CBS News. So consumer sentiment has dipped dramatically, but you say the economy and the hard data is still solid. What is your message to consumers that clearly disagree and don’t feel that strength? Because the hard data they’re looking at is their grocery bill.
Answer: Okay, so a couple things. The grocery bill is about, about past inflation, really. There was inflation in ’21, ’22, and ’23, and prices went up. The current level—it’s not the change in prices. It’s, they’re unhappy—and, and they’re not wrong to be unhappy—that prices went up quite a bit, and they’re paying a lot for those things. So that’s—I think that is the fundamental fact and has been for a long time—a couple years—why people are unhappy with the—with the economy. It’s not that the economy’s not growing. It’s not that inflation’s really high. It’s not that unemployment is high. It’s none of those things. We have, you know, 4.1 percent unemployment. We’ve got 2 percent growth, and, you know, it’s, it’s a pretty good economy. But people are unhappy because of the price level. And, and I do—we completely understand and accept that.

Question (Neil Irwin, Axios): True. Quick QT question: Does the Committee envision at some point tapering the MBS runoff, runoff as well?
Answer: I think tapering it—I, I don’t know. There’s no plan to do that. You know, at a certain point, we’ll stop runoff. And we may or may not stop MBS runoff, though, because, you know, we can—we can—we, we want to stop runoff in net at some point. We haven’t made any decisions about that, but, you know, we, we want the—we want the MBS to roll off our balance sheet. We really, strongly desire that, so—but we haven’t made any decisions about that, you know. We, we will—we—I think we’d, we’d look carefully at letting that keep going, but hold the overall size of the balance sheet in, you know, constant, at some point—a point that we’re not at yet.