Federal Reserve press conference, 2022-05-04 — Chair Jerome Powell

Question (Michael McKee, Bloomberg): Do you think the Fed has a credibility problem?
Answer: No, I don’t. And a good example of why would be—in the fourth quarter of last year, as we started talking about tapering sooner and then raising rates this year, you saw financial markets reacting, you know, very appropriately. Not to bless any particular day’s measure, but the way financial markets, the forward rate curve has tightened in response to our guidance and our actions really amplifies our policy. It’s—monetary policy is working through expectations now, to a very large extent. We’ve only done two rate increases. But if you look at financial conditions, the two-year [rate] is at 280 [basis points] now. In September, I think it was at 20 basis points. And that’s all through the economy. People are feeling those higher rates already. And so that shows that the markets think that our forward guidance is credible. And I think we want to keep it that way.