Federal Reserve press conference, 2024-06-12 — Chair Jerome Powell

Question (Nick Timiraos, Wall Street Journal): Nick Timiraos of the Wall Street Journal. Chair Powell, if I look at the, the rate projections, I see 15 of the 19 that are anticipating either one or two cut—two cuts this year—fairly evenly split between the two. And so I wonder if you could explain a little more the nuances or the differences there. Would two or three more inflation readings like the one that we saw this morning make a September interest rate cut possible?
Answer: So as far as the SEP part of that is concerned—as you know, I talk to—I talk to all of the other participants on the FOMC every cycle, and we talk about their Summary of Economic Projections and, and the dot plot—and, you know, their dot plot and everything. And what you—what I hear and see is that people are looking at, at, you know, a range of plausible outcomes. And in many cases, they’re—they’re thinking, “I don’t really”— you know, “I can’t really distinguish between two of these. They’re so close for me.” These are very close calls, but we ask them to write down the most likely one—so they do. And as, I think, you’ve, you’ve—as you’ve said, there’s 15 of the 19 are, are kind of clustered around one or two. So I think I would look at, at all—I’d look at all of them as plausible, but I’d look at—so I think that does tell you kind of what the Committee thinks. But what everyone agrees on is, it’s going to be data dependent. No one—no one brings to this or takes away from it that is on the Committee a really strong commitment to a particular rate path. It’s actually just their forecast and their—it’s a combination of their forecast and their own reaction function. But, again, everyone would say that this is very data dependent, and I don’t hold it with high confidence. And I think if you’re looking for—and, and don’t really think that they’re—they’re not trying to send a strong signal that “this is what I think is the right thing.” It’s just what they think at a given moment in time, subject to data. In terms of, you know, future meetings, we haven’t, you know—we don’t—we don’t try to—we don’t make decisions about future meetings until we get there. I think in terms of what we need to see, I mentioned it earlier—we, we want to—we want to gain further confidence. Certainly, more good inflation readings will help with that. I’m not going to be specific about how many because, you know, really, it’s going to be not just the inflation rating—readings—it’s going to be the totality of the data: what’s happening in the labor market, what’s happening with the balance of risks, what’s happening with the forecast, what’s happening with growth. You look at all of that, and you ask, “Are we confident? Have we reached an appropriate level of confidence that inflation is moving down sustainably to 2 percent, or, alternatively, do we see really unexpected signs of weakness in the labor market that would call for a response?”—which is—which is another thing that could, could happen. But, again, we don’t see that. And I—we do see today’s—we see today’s report as, as progress and as, you know, building confidence. But we, we don’t see ourselves as having the confidence that would warrant—you know, that would warrant beginning to, to loosen policy at this time.

Question (Rachel Siegel, Washington Post): And you’ve been talking about this clear sense that it’s just going to take longer to have the confidence that’s needed for rate cuts. Is there something about what happened in the first couple of months of the year that you’re seeing differently now with more time or hindsight? Do you still characterize it as expected bumpiness or something more lasting that is affecting your policy for the rest of the year?
Answer: You know, we always want to avoid the tendency to dismiss the parts of inflation that we—that we don’t like and just make it go away. So—but we had a quarter where inflation was running higher, and, yes, I could stand here and say, “It’s stuff we shouldn’t have taken signal from.” But it is what it is. You know, you, you have to—you know, low inflation is low inflation. High—so if you have a quarter where it’s higher—we tried not to take signal from the first couple of months, but we got a third month, and we said, “Okay, the signal we’re taking is that, you know, we think it’s going to take longer to get confidence that inflation is moving sustainably down to 2 percent.” That’s, that’s what we said. I think that was the right thing to do. I still think that’s the right thing to do. Now we have today’s inflation reading, which is very different—very much more positive. We’re going to have to see what the trend is—what’s, what’s going to be the data going forward. We’re looking for something that gives us confidence that inflation is, is moving sustainably down to 2 percent. And readings like today’s, you know—that’s a step in the right direction. But, you know, one reading is—isn’t—it just—it’s only one reading. You don’t want to—you don’t want to be too motivated by any single data point.

Question (Jo Ling Kent, CBS News): Hi, Chair Powell. Thank you for taking our questions. I’m Jo Ling Kent, with CBS News. What’s your message to Americans who are seeing encouraging economic data but don’t feel good about this economy?
Answer: I, you know—I, I don’t think anyone knows—has a definitive answer why people are, are not as happy about the economy as they might be. And we don’t tell people how they should think or feel about the economy. That’s not our job. We—you know, people experience what they experience. All I can tell you is what the—what the data show, which is, we’ve got an economy that’s growing at a solid pace. We’ve got a very strong labor market with unemployment at 4 percent. It’s been a long time since we’ve had, you know, a long stretch of time with unemployment at or below 4 percent—very long time. We had a period of high inflation. We—inflation has come down really significantly, and we’re doing everything we can to—you know, to bring that inflationary episode fully to a halt and fully restore price stability. We’re confident that we’ll get there. And in the meantime, you know, it’s going to be painful for, for people, but the ultimate pain would be a, a period of long, high—a long period of high inflation. It is people who—lower-income people—people who are at the margins of the economy who, who have the worst experience—who experience the most pain from inflation. So, you know, it’s for those people—for all Americans, but particularly for those people—that we’re doing everything we can to bring inflation back down under control.

Question (Claire Jones, Financial Times): Claire Jones, Financial Times. I’m just drawing on the change in the statement on there being “modest further progress” on inflation. You know, halfway, you know, through the year and after today’s CPI release, you know, what have you and other Committee members found that has been particularly encouraging to you? And just in terms of the conservatism, how much of that is about stickiness and shelter inflation in particular? Thank you.
Answer: So, encouraging has been that growth—you know, the growth, clearly, that we had last year, particularly the second half of last year, and we continue to see still-strong growth—solid growth this year. That’s been very encouraging. If you go back a year, there was a real concern about, you know, very much slowing growth and, and a recession—many forecasters had that. And that’s not what happened. Instead, we—the U.S. is, anyway, and it’s in—it’s in sharp distinction with many other advanced economies around the world. So that’s been encouraging. I would say that the, the—today’s inflation report is encouraging, but it comes after, you know, several reports that were not so encouraging. You asked about—your second question was really about shelter inflation. So I think if you go back a couple of years—we, we know that there were renters, and then there are, you know, people who own their houses. And we have OER, which is owners’ equivalent rent. And so when market-based rents go up sharply, as they did at the beginning of the—of the—when the economy reopened, they really went up sharply. Those play into rollover rents much more slowly for existing tenants than they do for new tenants. And, and so what we—so we, we’ve found now that there are big lags. So there’s sort of a—there’s a bulge of high past increases in, in market rents. It has to get worked off, and that may take, you know, several years. Nonetheless, as long as market rents remain—are going at—up at relatively low levels—and they still are—you know, this, this is just going to happen. It just is going to happen more slowly than we thought. You know, we, we also do sort of this thing where we impute a rental value to, to owned homes. And that’s—you know, many countries around the world do that. Some do it differently than us. It’s something that the—you know, that the, the price experts have regularly looked at. It is not something that we’re the only country that does, and it’s not something we’re looking at changing or would look at changing, you know, anytime soon. But it—it’s true. It’s one of the very hardest things in, in inflation and in prices is how to think about, you know, the services that someone is getting by living in a home that they could rent, but they’re actually living in it. And some countries—you should just ignore that. But that’s not our—that’s not how we do inflation here. We, we do it the way we do it, and we’ve been very transparent about it. And, you know, it’s true that we’re—we’re seeing delays in, in realizing what—what’s happening economically. But we understand that—you know, we understand that very well.

Question (Victoria Guida, Politico): So something like negative payroll numbers would be—
Answer: I’m not going to—yeah, I mean, I, I can think of things that would— many things would make it on that list, but I don’t think I’ll, I’ll utter them here.

Question (Evan Ryser, MNI): Thank you, Chair Powell. Evan Ryser with Market News International. You have mentioned before the framework review process will start in the latter half of the year. At this point, do you have any specific time frame for the start of that? Who will lead it? Will you be—will it be you or a member—a Committee group of your—of your peers? What will be the parameters? Do you anticipate the review will consider changes in communications going forward?
Answer: So we—what, what we’ve been thinking is that we would announce and commence the review later or late in the year. In the meantime, as that time approaches, we will be devoting a lot of careful thought and planning to the contours of it. Within scope would certainly be communications generally. I—I’m not going to say that we’ll look at this or that particular thing. And all the other details, you know—we’re just—we don’t want to get prematurely into a conversation until it’s really time to have it. And so, you know, I’m going to leave pretty much everything else to, to later in the year.