September 20, 2023
Jerome H. Powell
September 20, 2023 FOMC Press Conference
- The chair said the median SEP projection for the federal funds rate is 5.6 percent at the end of 2023, 5.1 percent at the end of 2024, and 3.9 percent at the end of 2025, with the 2024 and 2025 medians revised up by half a percentage point from June.
- The chair said a majority of FOMC participants believe it is more likely than not that one more rate hike will be appropriate in the two remaining meetings this year, while seven participants wrote down no hike.
- The chair said real interest rates are now "well above" mainstream estimates of the neutral policy rate, but acknowledged uncertainty in gauging the stance of policy.
- The chair said the stronger economic activity, not increased inflation persistence, is the main reason for the higher projected rate path, and that it is "certainly plausible" the neutral rate is higher than the longer-run rate.
- The chair said the labor market has shown "meaningful rebalancing" without an increase in unemployment, but declined to call a soft landing a baseline expectation, noting below-trend growth and some labor market softening are likely required.
From the opening statement
Press conference
CHAIR POWELL. Good afternoon, everyone. My colleagues and I remain squarely focused on our dual mandate to promote maximum employment and stable prices for the American people. We understand the hardship that high inflation is causing, and we remain strongly committed to bringing inflation back down to our 2 percent goal. Price stability is the responsibility of the Federal Reserve. Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.
Since early last year, the FOMC has significantly tightened the stance of monetary policy. We’ve raised our policy interest rate by 5¼ percentage points and have continued to reduce our securities holdings at a brisk pace. We’ve covered a lot of ground, and the full effects of our tightening have yet to be felt. Today, we decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings. Looking ahead, we’re in a position to proceed carefully in determining the extent of additional policy firming that may be appropriate. Our decisions will be based on our ongoing assessments of the incoming data and the evolving outlook and risks. I will have more to say about monetary policy after briefly reviewing economic developments.
Recent indicators suggest that economic activity has been expanding at a solid pace, and, so far this year, growth in real GDP has come in above expectations. Recent readings on consumer spending have been particularly robust. Activity in the housing sector has picked up somewhat, though it remains well below levels of a year ago, largely reflecting higher mortgage rates. Higher interest rates also appear to be weighing on business fixed investment. In our Summary of Economic Projections, or SEP, Committee participants revised up their assessments of real GDP growth, with the median for this year now at 2.1 percent. Participants expect growth to cool, with the median projection falling to 1.5 percent next year.