May 1, 2024
Jerome H. Powell
May 1, 2024 FOMC Press Conference
- The chair said that private domestic final purchases grew at 3.1 percent in the first quarter, matching the strength of the second half of 2023, despite overall GDP growth moderating to 1.6 percent.
- The chair stated that it is unlikely the next policy rate move will be a hike, and that a hike would require persuasive evidence that the policy stance is not sufficiently restrictive to bring inflation sustainably down to 2 percent.
- The chair said that gaining greater confidence that inflation is moving sustainably toward 2 percent will likely take longer than previously expected, based on the first quarter's inflation readings.
- The chair noted that with principal payments on agency securities currently running at about $15 billion per month, total portfolio runoff will amount to roughly $40 billion per month after the slowdown begins in June.
- The chair said that slowing the pace of balance sheet runoff does not mean the balance sheet will ultimately shrink by less, but rather allows a more gradual approach to its ultimate level to reduce the possibility of money market stress.
From the opening statement
Press conference
CHAIR POWELL. Good afternoon. My colleagues and I remain squarely focused on our dual mandate to promote maximum employment and stable prices for the American people. The economy has made considerable progress toward our dual-mandate objectives. Inflation has eased substantially over the past year, while the labor market has remained strong. And that’s very good news. But inflation is still too high, further progress in bringing it down is not assured, and the path forward is uncertain. We are fully committed to returning inflation to our 2 percent goal. Restoring price stability is essential to achieve a sustainably strong labor market that benefits all.
Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings, though at a slower pace. Our restrictive stance of monetary policy has been putting downward pressure on economic activity and inflation, and the risks to achieving our employment and inflation goals have moved toward better balance over the past year. However, in recent months, inflation has shown a lack of further progress toward our 2 percent objective, and we remain highly attentive to inflation risks. I’ll have more to say about monetary policy after briefly reviewing economic developments.
Recent indicators suggest that economic activity has continued to expand at a solid pace. Although GDP growth moderated from 3.4 percent in the fourth quarter of last year to 1.6 percent in the first quarter, private domestic final purchases—which excludes inventory investment, government spending and net exports, and usually sends a clearer signal on underlying demand—was 3.1 percent in the first quarter, as strong as the second half of 2023. Consumer spending has been robust over the past several quarters, even as high interest rates have weighed on housing and equipment investment. Improving supply conditions have supported resilient demand and the strong performance of the U.S. economy over the past year.