Federal Reserve press conference, 2023-02-01 — Chair Jerome Powell

Question (Rachel Siegel, Washington Post): Has your expectation for where the unemployment rate might go changed since December?
Answer: No. We’re going to write down new forecasts at the March meeting, and we’ll see at that time. I will say that it is gratifying to see the disinflationary process now getting under way, and we continue to get strong labor market data. So—but, you know, we’ll update those forecasts in March.

Question (Neil Irwin, Axios): Hi, Chair Powell. Neil Irwin with Axios. You and some of your colleagues have emphasized the possibility that job openings could come down and that would let some of the air out of the labor market without major job losses. We saw the opposite in the December JOLTS this morning. Job openings are actually rising. That also coincided with slowdown in wage inflation. Do you believe that openings are an important indicator to be studying to understand where the labor market is and where wage inflation might be heading?
Answer: So you’re right about the data, of course. What we did see—we’ve seen average hourly earnings and now the employment cost index abating a little bit still off of their highs of six months ago and more but still at levels that are fairly elevated. The job openings number has—in JOLTS, has been quite volatile recently. Yeah, I did see that it moved up—back up this morning. I do think that it’s probably an important indicator. The ratio, I guess, is back up to 1.9 job openings to unemployed people, people who are looking for work. So it’s an indicator, but nonetheless, we—you’re right, we do see wages moving down. If you look across the rest of the labor market, you still see very high payroll job creation. And, you know, quits are still at an elevated level. So many, many—by many, many indicators, the job market is still very strong.

Question (Victoria Guida, Politico): Will the Fed do what Treasury directs as it relates to making payments or will it do its own analysis of any legal constraints?
Answer: Okay. So I feel like I have to say this. There’s only one way forward here, and that is for Congress to raise the debt ceiling so that the United States government can pay all of its obligations when due. And any deviations from that path would be highly risky and that no one should assume that the Fed can protect the economy from the consequences of failing to act in a timely manner. In terms of our relationship with the Treasury, we are their fiscal agent. And I’m just going to leave it at that.

Question (Steve Liesman, CNBC): Can we get there with 5 percent?
Answer: Certainly possible. Yeah. Absolutely it’s possible. You know, it’s a question—no one really knows. I think it’s because this is not like the other business cycles in so many ways. It may well be that as—yeah, as—that it will take more slowing than we expect—than I expect to get inflation down to 2 percent. But I don’t—that’s not my base case. My base case is that the economy can return to 2 percent inflation without a really significant downturn or a really big increase in unemployment. I think that’s a possible outcome. I think many, many forecasters would say it’s not the most likely outcome. But I would say there’s a chance of it.