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

Question (Christopher Rugaber, Associated Press): And could you just follow—on the path where you might not cut, is that—you mentioned that would be inflation persistent—I mean, is inflation—would that be the key data in making that decision, or could you expand a bit more on that? Thank you.
Answer: Again, it’s, it’s—we’ve set ourselves a test that we—for us to begin to reduce policy restriction, we’d want to be confident that inflation is moving—you know, moving sustainably down to 2 percent, and, for sure, one of the things we’d be looking at is the performance of inflation. We’d also be looking at inflation expectations. We’d be looking at the whole story. But clearly, incoming, incoming inflation data would be at the very heart of that decision.

Question (Rachel Siegel, Washington Post): Hi, Chair Powell. Rachel Siegel from the Washington Post. Thanks for taking our questions. You talked about needing time to gain more confidence that inflation is sustainably moving back down to 2 percent. It’s May now. Do you have time this year to cut three times, just given the calendar?
Answer: Yeah. I’m not really thinking of it that way. You know, the—what we said is that we need to be more confident, and we’ve said—my colleagues and I today said that we didn’t see progress in the first—in the first quarter. And I’ve said that it appears, then, that it’s going to take longer for us to reach that point of confidence. So I don’t know how long it’ll take. You know, I can just say that when we get that confidence, then rate cuts will be in scope. And I don’t know exactly when that will be.

Question (Simon Rabinovitch, The Economist): Thank you, Chair Powell. Question about the labor market— you’ve mentioned a few times that the labor market is normalizing. Certainly, today’s JOLTS data suggested that things are kind of getting back to pre-pandemic levels. One thing that hasn’t normalized is wage growth, which is still quite a bit stronger than before the pandemic. I wonder if you can share your analysis of, of why that’s happening. Is it a lagging indicator, or is something else going on?
Answer: So I think if you go back to where wages peaked—wage increases peaked a couple, three years ago—essentially all wage measures have come down substantially [when compared] to that. But they are not, not down to where they were before the pandemic. They’re still roughly a percentage point higher. And we’ve seen pretty consistent progress but not uniformly. And you’ll note the ECI reading from Tuesday was—it was expected to be—to have come down, and, essentially, it was flat year over year, you know, I think roughly. So yeah, I mean, it’s—that part of it is bumpy. And, again, we don’t target wage increases, but, you know, in the longer run, if you have—if you have wage increases running higher than productivity would warrant, then, you know, there will be inflationary pressures. Employers will raise prices over time if that’s the case. So we’ve seen progress. It has been inconsistent, but we have seen a substantial decline overall. But we have a ways to go on that.