Federal Reserve press conference, 2025-01-29 — Chair Jerome Powell

Question (Nick Timiraos, Wall Street Journal): Nick Timiraos, the Wall Street Journal. Chair Powell, you and several of your colleagues said around the time of the last meeting that your policy stance was “meaningfully restrictive.” Given economic and financial market developments since then, how has your confidence changed in an assessment that says interest rates are meaningfully restrictive?
Answer: I don’t think that my assessment really has changed. I mean, a couple of things have happened. We’ve gotten more strong data, but we’ve also seen rates move up at the long end, which could represent a tightening in financial conditions. I think if we look back over the past year or so, we can see that policy is restrictive. If you look at the effect of high rates on interest-sensitive spending—for example, in housing—and if you look at the achievement of our goal variables, we’re seeing the economy move toward 2 percent inflation and, and has moved largely to maximum employment, so. Though we literally look at the—at the—at movement toward the goal variables to make that assessment. Now, policy is meaningfully less restrictive than it was before we began to cut. It’s 100 basis points less restrictive. And for that reason, you know, we’re going to be focusing on seeing real progress on inflation or, alternatively, some weakness in the labor market before we—before we consider making adjustments.

Question (Nick Timiraos, Wall Street Journal): If I could follow up. Does the economy here warrant meaningfully restrictive interest rates, and would you judge interest rates to still be meaningfully restrictive if you were to lower them by another ¼ point?
Answer: So, I, I think our policy stance is very well calibrated, as I mentioned, to balance the achievement of our two—of our two goals. We, we want to—policy to be restrictive enough to continue to foster further, further progress for our 2 percent inflation goal. At the same time, we don’t need to see further weakening in the labor market to achieve that goal, and that’s kind of what we’ve been getting. The labor market has really been broadly stable; the unemployment rate has been broadly stable now for six months. Conditions seem to be broadly in balance. And I would say, look at the last couple of inflation readings and you see we don’t—we don’t overreact to two good readings or two bad readings. But, nonetheless, the last couple of readings have suggested, you know, more positive readings. So I, I think we’re—I think policy’s well, well positioned.

Question (Colby Smith, New York Times): Colby Smith, with the New York Times. Chair Powell, how should we interpret the removal of the line from the statement that inflation has made progress towards the 2 percent goal? Is that no longer the case?
Answer: No, so let me look—if you just look at the first paragraph, we did a little bit of language cleanup there. We took out a reference to “since earlier in the year” as it related to the labor market, and we just chose to, to shorten that sentence. Again, I, I mean, if you look at the sort of intermeeting data was good, and, and there was—there was another inflation reading, I guess, just before the December meeting. So, we’ve got two, two good readings in a row that are consistent with 2 percent inflation. Again, we’re not going to overinterpret two good or two bad readings, but this was not meant to send a signal other than this: You know, you, you can take away from all of this that we remain committed to achieving our 2 percent inflation goal sustainably.

Question (Victoria Guida, Politico): Victoria Guida with Politico. So, as a general matter, when it comes to executive orders and OMB memos, do those always apply to the Fed, sometimes, never, or do you just often voluntarily comply? What is—what is the legality there?
Answer: So it’s been—it’s been our practice, as I mentioned, to work to align our policies to those that are mentioned in, in the executive orders. And that’s—I’m just going to leave it at that. As I mentioned, I’m not going to—I’m not going to go any deeper than that or, or get into any deeper into this set of issues today.

Question (Mark Hamrick, Bankrate): And with respect to households and their inclusion in that asset class?
Answer: I, you know, that’s, that’s kind of a—it’s not really our, our bailiwick. You want people to be knowledgeable about the financial engagements that they have, and that’s why we have, you know, the securities law, laws that we have. It’s why, you know, if you read a mutual fund prospectus or individual stock prospectus, you, you want households to have the chance to understand the risk that they’re taking. And, you know, I, I do think it would be helpful if there were a greater regulatory apparatus around crypto, and I think that, that’s something Congress was working on quite a lot. We’ve actually spent a lot of time, you know, with members of Congress working together with them on, on various things, and I, I think that would be a very constructive thing for, for Congress to do. Thank you.