Federal Reserve press conference, 2018-12-19 — Chair Jerome Powell

Question (Steve Liesman, CNBC): Mr. Chairman, Steve Liesman, CNBC. Could you tell us how three things affected the outlook for the economy and rates? The first is how the market’s decline affected the outlook for the economy and for rates. The second is trade tensions and the tariff, or how you factor that into your outlook. And the third is comments by the President urging you not to hike rates.
Answer: So, as I mentioned, we monitor a broad range of economic conditions, including financial conditions—a broad range of financial conditions. And we took on board the tightening in financial conditions, which—not any one condition, but, broadly speaking, financial conditions have tightened since the September meeting, really. So we took that on board in our forecast. That’s why the forecast for growth and inflation went down a little bit. But, remember, that’s in a context of a more accommodative path. So we also took down our rate forecast. So we definitely did take that into account, and, as you can see from the statement language, we acknowledged those risks in the clause about monitoring developments. And we’re going to be watching carefully to see as those things develop. I think, more broadly, there’s been a sense of concern among business people and market people about global growth, and, you know, that may be partly about trade tensions, it may be partly about a variety of things. If you just mechanically drop into a model of the U.S. economy tariffs, you don’t see very large effects. The large effects would have to come from financial market changes or from losses in business confidence. And those are things that are very difficult to model. On your third factor, you know, political considerations have played no role whatsoever in our discussions or decisions about monetary policy. We’re always going to be focused on the mission that Congress has given us. We have the tools to carry it about. We have the independence, which we think is essential to be able to do our jobs in a nonpolitical way. And you know, we are—we at the Fed are absolutely committed to that mission, and nothing will deter us from doing what we think is the right thing to do.

Question (Michelle Fleury, BBC): Michelle Fleury, BBC News. Chairman Powell, you talked about monitoring global developments. I was wondering, you touched on trade, the trade dispute with China. But could you elaborate on what economic developments you’re referring to, whether Brexit is one of those? What else?
Answer: More broadly, I’m referring to global growth. So, if you go back a year, 2017 was a year of kind of ongoing upside surprises in global growth. It was the year of synchronized global growth. And people raised their forecasts for growth around the world kind of throughout 2017 and, in some sense, expected that to continue into 2018. What has happened instead has been a modest retracing of that. So you have still healthy levels of growth in the aggregate around the world but close to the potential growth rate of, you know, the global economy. But you no longer have the really strong levels of growth you had in 2017. So that is one—that’s, I think, the key fact. We also monitor, you know, event risks like Brexit—like, you know, like the negotiations between Italy and the EU over their budget. And, you know, as far as those are concerned, we monitor them very carefully. And I’m going to—I’ll mention Brexit. Our financial institutions have had a long time now to get ready for the full range of possible exits from the EU by the U.K. And they’ve had supervisory involvement from U.S. supervisors, from U.K. supervisors, from EU supervisors—we think they are fully prepared for the full range of outcomes that may come out of that. I was very happy to see the developments around central counterparties today. That was a big issue that seems to have been satisfactorily, for the time being, resolved. So it’s something we’re watching carefully. Honestly, it shouldn’t have major implications for the United States, but, you know, there’s a lot of uncertainty because it’s not something that’s happened before. So we’ll be watching it carefully. Thanks very much.