jerome h powell : semiannual monetary policy report to the congress testimony by mr jerome h powell, chairman of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 26 february 2019. * * * good morning. chairman crapo, ranking member brown, and other members of the committee, i am happy to present the federal reserve ’ s semiannual monetary policy report to the congress. let me start by saying that my colleagues and i strongly support the goals congress has set for monetary policy — maximum employment and price stability. we are committed to providing transparency about the federal reserve ’ s policies and programs. congress has entrusted us with an important degree of independence so that we can pursue our mandate without concern for short - term political considerations. we appreciate that our independence brings with it the need to provide transparency so that americans and their representatives in congress understand our policy actions and can hold us accountable. we are always grateful for opportunities, such as today ’ s hearing, to demonstrate the fed ’ s deep commitment to transparency and accountability. today i will review the current economic situation and outlook before turning to monetary policy. i will also describe several recent improvements to our communications practices to enhance our transparency. current economic situation and outlook the economy grew at a strong pace, on balance, last year, and employment and inflation remain close to the federal reserve ’ s statutory goals of maximum employment and stable prices our dual mandate. based on the available data, we estimate that gross domestic product ( gdp ) rose a little less than 3 percent last year following a 2. 5 percent increase in 2017. last year ’ s growth was led by strong gains in consumer spending and increases in business investment. growth was supported by increases in employment and wages, optimism among households and businesses, and fiscal policy actions. in the last couple of months, some data have softened but still point to spending gains this quarter. while the partial government shutdown created significant hardship for government workers and many others, the negative effects on the economy are expected to be fairly modest and to largely unwind over the next several months. the job market remains strong. monthly job gains averaged 223, 000 in 2018, and payrolls increased an additional 304, 000 in january. the unemployment rate stood at 4 percent in january, a very low level by historical standards, and job openings remain abundant. moreover, the ample availability of job opportunities appears to have encouraged some people to join the workforce

’ s total assets declined about $ 310 billion since the middle of last year and currently stand at close to $ 4. 0 trillion. relative to their peak level in 2014, banks ’ reserve balances with the federal reserve have declined by around $ 1. 2 trillion, a drop of more than 40 percent. in light of the substantial progress we have made in reducing reserves, and after extensive deliberations, the committee decided at our january meeting to continue over the longer run to implement policy with our current operating procedure. that is, we will continue to use our administered rates to control the policy rate, with an ample supply of reserves so that active management of reserves is not required. having made this decision, the committee can now evaluate the appropriate timing and approach for the end of balance sheet runoff. i would note that we are prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments. in the longer run, the size of the balance sheet will be determined by the demand for federal reserve liabilities such as currency and bank reserves. the february monetary policy report describes these liabilities and reviews the factors that influence their size over the longer run. i will conclude by mentioning some further progress we have made in improving transparency. late last year we launched two new publications : the first, financial stability report, shares our assessment of the resilience of the u. s. financial system, and the second, supervision and regulation report, provides information about our activities as a bank supervisor and regulator. last month we began conducting press conferences after every fomc meeting instead of every other one. the change will allow me to more fully and more frequently explain the committee ’ s thinking. last november we announced a plan to conduct a comprehensive review of the strategies, tools, and communications practices we use to pursue our congressionally assigned goals for monetary policy. this review will include outreach to a broad range of stakeholders across the country. the february monetary policy report provides further discussion of these initiatives. thank you. i am happy to respond to questions. 3 / 3 bis central bankers'speeches