Chair Powell's Press Conference - June 12, 2024

Key Goals

• Dual Mandate: Maximum employment and stable prices.
• Current Economic Progress:
  • Labor market balance with strong job gains and low unemployment.
  • Inflation reduced from 7% to 2.7%, but still above the 2% goal.

Monetary Policy Decisions

• Interest Rates: FOMC decided to leave policy interest rate unchanged.
• Securities Holdings: Continue reducing holdings to maintain restrictive monetary policy.

Economic Developments

• GDP Growth:
  • Q4 2023: 3.4%
  • Q1 2024: 1.3%; Private domestic final purchases grew 2.8%.
  • Median GDP growth projection: 2.1% (2024), 2.0% (2025-2026).
• Consumer Spending: Slowed but remains solid.
• Investment: Equipment and intangibles investment increased from last year.

Labor Market

• Job Gains: Averaged 218,000 jobs per month in April and May.
• Unemployment Rate: Increased slightly to 4%, still low.
• Wage Growth: Eased over the past year.
• Participation: Increased among ages 25-54 and strong immigration.
• Future Outlook: Median unemployment rate projection: 4.0% (end of 2024), 4.2% (end of 2025).

Inflation

• Current Trends:
  • Total PCE prices rose 2.7% over the 12 months ending April.
  • Core PCE prices rose 2.8%.
  • CPI higher at 3.3%; Core CPI at 3.4%.
• Long-term Projections:
  • Total PCE inflation: 2.6% (2024), 2.3% (2025), 2.0% (2026).

Federal Reserve Policy Stance

• Interest Rates: Maintain target range at 5% - 5.25%.
• Inflation Goal: Committed to not reducing target range until greater confidence in inflation sustainably moving toward 2%.
• Risk Management: Balancing timing of reducing policy restraint to avoid reversing inflation progress or weakening economic activity.

SEP Projections

• Federal Funds Rate:
  • 2024: 5.1%
  • 2025: 4.1%
  • 2026: 3.1%
• Policy Adjustments: Based on evolving economic data and risks.

General Observations

• Wage and Price Trends: Wage growth above sustainable path but not main inflation cause.
• Monetary Policy Impact: Restrictive policy perceived as having desired economic effects thus far.

Questions & Answers Highlights

• Inflation Forecasting: Conservative assumptions in forecasts; anticipate inflation data may adjust projections.
• Rate Cut Considerations: Data-driven approach, no fixed commitment to rate path adjustments.
• Labor Market and Inflation Relationship: Monitoring wage and price balance to assess inflation progress.
• Household Financial Health: Credit card usage up amid financial pressures, reflecting broader economic conditions.
• Global Currency Impacts: Strong dollar affects international markets but not directly managed by Fed.