Federal Reserve press conference, 2021-07-28 — Chair Jerome Powell

Question (Ann Saphir, Reuters): I apologize. I—just to follow up on the question, I want to ask, you know, is it—is it correct to see this as the, the start of the advance notice process, you know, before a taper? And, and, and also, can you speak to how the recent surge in COVID factors into your thinking on, on the taper? Thanks.
Answer: So, as you know, we’re, we’re in a process now where what we said is that as—at this meeting and in coming meetings, we’re going to be continuing to assess the economy’s progress toward our goals and give advance notice. We’ll be—try to provide additional clarity about our thinking, both in the—in the postmeeting statement and in the minutes and in the public comments that people make. You know, our, our approach here has been to be as transparent as we can. We have not reached substantial further progress yet. So we’re, we’re not there, and we see our ways as having some—we see ourselves as having some ground to cover to get there. So that’s what I would say. In terms of—in terms of, of COVID and the Delta strain, I’ll say a couple things. Of course, it will have significant health consequences for many. And we need to keep that in mind before we start—before we mention and move to the economic questions. This is a—rising cases in, in a number of parts of the country, and some forecasts are for them to rise quite significantly. We’ll see. What we’ve seen, though, is with successive waves of, of COVID over the past year and some months now, there has tended to be less economic—less in the way of economic implications from each wave. And we will see whether that is the case with the Delta variety. But it’s, you know, it’s a—it’s certainly a—not an unreasonable expectation. So it, it certainly is plausible if people would pull back from some activities because of the risk of infection. Dining out, traveling, schools might—some schools might not reopen. We may just—we may see economic effects from some of that, or it might weigh on, on the return to the labor market. Some people might choose—again, we, we don’t have a strong sense of how that might work out, so we’ll just be monitoring it—monitoring it carefully.

Question (Brian Cheung, Yahoo Finance): Hi, Chairman Powell. Brian Cheung, Yahoo Finance. I’m just wondering if you could provide a little bit more color in terms of how you’re thinking about mortgage-backed securities purchases as you inch towards taper. Within the context of home prices continuing to rise, we’ve heard a lot of people talk about the idea that maybe they’d like to cool off on, specifically, the MBS purchases. Is that more because of the optics, or is it because there’s an observed relationship from the Committee’s view between MBS purchases under QE and the hot housing market? Thanks.
Answer: So a number of participants raised that—the questions around MBS and tapering at, at today’s meeting, as a matter of fact, and yesterday’s meeting. And I’ll just say that, generally speaking, I don’t think and—I don’t think that—I think that Treasury and MBS purchases affect financial conditions in very similar ways. There may be modest differences in terms of, of contribution to housing prices, but it’s, it’s not something that’s big. It’s not—it’s—so where I think we are is, there, there really is little support for the idea of tapering MBS earlier than Treasuries. I think we will taper them at the same time. It seems likely, based on where people are now. The idea of reducing MBS purchases at a somewhat faster pace than Treasuries does have some attraction for some people—others, not so much. And I think it’s something that we’ll be continuing to discuss.