December 14, 2022
Jerome H. Powell
December 14, 2022 FOMC Press Conference
- The chair said the FOMC raised the policy interest rate by ½ percentage point, bringing the target range to 4¼ to 4½ percent, and that this was a step-down from the 75 basis point pace of the previous four meetings.
- The chair said the median projection in the Summary of Economic Projections for the federal funds rate is 5.1 percent at the end of next year, 4.1 percent at the end of 2024, and 3.1 percent at the end of 2025, and that 17 of 19 FOMC participants wrote down a peak rate of 5 percent or more.
- The chair said the median projection for real GDP growth is just 0.5 percent this year and next, and that the median projection for the unemployment rate rises to 4.6 percent at the end of next year.
- The chair said that the inflation data for October and November show a welcome reduction in the monthly pace of price increases, but that it will take substantially more evidence to give confidence that inflation is on a sustained downward path.
- The chair said that the most important question now is no longer the speed of rate increases but the ultimate level and how long to remain restrictive, and that the decision on the February meeting will be based on incoming data and financial conditions.
From the opening statement
Press conference
CHAIR POWELL. Good afternoon. Before I go into the details of today’s meeting, I would like to underscore for the American people that we understand the hardship that high inflation is causing and that we are strongly committed to bringing inflation back down to our 2 percent goal. Over the course of the year, we have taken forceful actions to tighten the stance of monetary policy. We have covered a lot of ground, and the full effects of our rapid tightening so far are yet to be felt. Even so, we have more work to do. Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy. Without price stability, the economy doesn’t work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.
Today, the FOMC raised our policy interest rate by ½ percentage point. We continue to anticipate that ongoing increases will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In addition, we are continuing the process of significantly reducing the size of our balance sheet. Restoring price stability will likely require maintaining a restrictive policy stance for some time. I will have more to say about today’s monetary policy actions after briefly reviewing economic developments.
The U.S. economy has slowed significantly from last year’s rapid pace. Although real GDP rose at a pace of 2.9 percent last quarter, it is roughly unchanged through the first three quarters of this year. Recent indicators point to modest growth of spending and production this quarter. Growth in consumer spending has slowed from last year’s rapid pace, in part reflecting lower real disposable income and tighter financial conditions. Activity in the housing sector has weakened significantly, largely reflecting higher mortgage rates. Higher interest rates and slower output growth also appear to be weighing on business fixed investment. As shown in our Summary of Economic Projections, the median projection for real GDP growth stands at just 0.5 percent this year and next, well below the median estimate of the longer-run normal growth rate.