Federal Reserve press conference, 2024-11-07 — Chair Jerome Powell

Question (Howard Schneider, Reuters): Thanks. Howard Schneider with Reuters. I wondered if you could please elaborate and explain a little bit the two changes in the language of the statement here in the first paragraph when you say, “Inflation has made progress,” dropping the word “further progress,” and in the second paragraph dropping the sentence that the Committee had “gained greater confidence” that inflation was progressing towards its 2 percent goal. Is there any policy substance behind either of those changes in language? Is it—is it meant to open the door to a December pause? Is it meant to communicate anything about the stickiness of core inflation in the last three months?
Answer: Not really, no. So let me tell you what we were thinking. So the test of gaining further confidence was a—was our test for the first rate cut, right? And so we, we met that test in September, and therefore we take that test out. If you leave it in, then it’s new forward guidance. It’s brand new forward guidance. “What do you mean by it? Are you—are you making—are you requiring yet further guidance?” We have to say “yes” or “no” at every meeting whether we’ve made further progress. The point is we have gained confidence that, that we’re on a sustainable path down to 2 percent. So that, I would tell you, is, is what that’s really all about. And it’s not meant to send a signal. Neither of those is meant to send a further signal. And, you know, saying “further progress” it becomes a test where we don’t want to be—we don’t think it’s a good time to be doing a lot of, of forward guidance. You know, we’re—there’s a fair amount of uncertainty in that—in what I’ve said. The path that we’re on, we do know what—where the destination is, but we don’t know the right pace, and we don’t know exactly where the destination is. So the—the—the point is to find that, to find the right pace and the right destination as we go. And I think there’s a fair amount of uncertainty about that, and, you know, you don’t want to tie yourself up with, with guidance. You want to be able to make sensible decisions as you go.

Question (Christopher Rugaber, Associated Press): Thank you. Chris Rugaber at Associated Press. You mentioned the positive economic data that we’ve seen since the September meeting, including the revisions to things like savings, higher GDP growth. We saw a stock market jump yesterday. That’s renewed some of the questions about why, why do many cuts at all in this—with this backdrop?
Answer: So you’re right. As I mentioned, and as you mentioned, the latest economic data have been strong, and that’s, of course, a great thing and highly welcome. But, of course, our mandate is maximum for employment and price stability, and we think that even with today’s cut, policy is still restrictive. We understand it’s not possible to say precisely how restrictive, but we feel that it is still restrictive. And if you look at our goal variables, the labor market has cooled a great deal from its overheated state of two years ago and is now essentially in balance. It is continuing to cool, albeit at a—at a modest rate, and we don’t need further cooling, we don’t think, to achieve our inflation mandate. So that’s the labor market. Inflation has moved down a great deal from its higher—its highs of two years ago, and we judged, as I mentioned, that it’s on a sustainable path back to 2 percent. So the job’s not done on inflation. But if you look at those two things, we judged in September that it was appropriate to begin to recalibrate our policy stance to reflect this progress, and today’s decision is really another step in that process. Overall, as I mentioned, we believe that with an appropriate recalibration of our policy stance, we can maintain strength in the labor market even as our policy stance enables further progress toward our inflation goal.