Federal Reserve press conference, 2022-09-21 — Chair Jerome Powell

Question (Jean Yung, MNI): Hi. Jean Yung with Market News. You’ve talked about the need to get real rates into positive territory, and you said earlier that policy is just moving into that territory now. So I’m curious, how restrictive is rates at 4.6 percent expected—is that expected to be next year? How restrictive?
Answer: So I think if you look, when we get to—if we—let’s assume we do get to that level, which I think is likely. What you’re going to do is, you’re going to adjust that for some forward-looking measure of inflation. And that could be—you pick your measure. It could be—there are all kinds of different things you could pick and you get—but what you’ll get is a positive number. In all cases, you will get forward inflation expectations in the short term, I think, that are going to be, assuming that we’re doing our jobs appropriately, that will be significant. So you’ll have a positive [real] federal funds rate at that point, which could be 1 percent or so, but—I mean, I don’t know exactly what it would be. But it would be significantly positive when we get to that level. And let me say, we’ve written down what we think is a plausible path for the federal funds rate. The path that we actually execute will be enough. It will be enough to restore price stability. So this is something that, as you can see, they’ve moved up, and we’re going to continue to watch incoming data and the evolving outlook and ask ourselves whether our policy is in the right place as we go. Thank you very much.