July 31, 2019
Jerome H. Powell
July 31, 2019 FOMC Press Conference
- The chair described the rate cut as a "midcycle adjustment to policy," contrasting it with the beginning of a lengthy cutting cycle.
- The chair said the FOMC's actions over the year, including moving from expected rate increases to a patient stance and then to the cut, have eased financial conditions and supported the economy.
- The chair noted that the median Committee participant's assessments of the neutral rate of interest and the longer-run normal rate of unemployment have declined this year.
- The chair stated that trade policy uncertainty is a factor the Fed is "learning by doing" and that the Fed plays no role in assessing or evaluating trade policies.
- The chair said that business contacts report ongoing uncertainty is making some companies more cautious about capital spending, and that weak global growth and trade tensions are having an effect on the U.S. economy.
From the opening statement
Press conference
CHAIR POWELL. Good afternoon, and welcome. We decided today to lower the target for the federal funds rate by ¼ percentage point to a range of 2 percent to 2 ¼ percent. The outlook for the U.S. economy remains favorable, and this action is designed to support that outlook. It is intended to insure against downside risks from weak global growth and trade policy uncertainty, to help offset the effects these factors are currently having on the economy, and to promote a faster return of inflation to our symmetric 2 percent objective. All of these objectives will support achievement of our overarching goal: to sustain the expansion, with a strong job market and inflation close to our objective, for the benefit of the American people. We also decided to conclude the runoff of our securities portfolio in August rather than in September, as previously planned. And I’ll discuss the thinking behind today’s interest rate reduction and then turn to the path forward.
As the year began, both the economy and monetary policy were in a good place. The unemployment rate was below 4 percent, and inflation had been running near our 2 percent objective for nine months. Our interest rate target was at the low end of estimates of neutral. Over the first half of the year, the economy grew at a healthy pace and job gains pushed unemployment to near a half-century low. Wages have been rising, particularly for lower-paying jobs. People who live and work in low- and middle-income communities tell us that many who have struggled to find work are now getting opportunities to add new and better chapters to their lives. This underscores for us the importance of sustaining the expansion so that the strong job market reaches more of those left behind.
Through the course of the year, weak global growth, trade policy uncertainty, and muted inflation have prompted the FOMC to adjust its assessment of the appropriate path of interest rates. The Committee moved from expecting rate increases this year to a patient stance about any changes and then to today’s action. The median Committee participant’s assessments of the neutral rate of interest and the longer-run normal rate of unemployment have also declined this year, reinforcing the case for a somewhat lower path for our policy rate. These changes in the anticipated path of interest rates have eased financial conditions and have supported the economy.