Information Box: Summary of U.S. FRB Chairman Powell's press conference

August 1, 2024 5:25 AM GMT+9

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The US Federal Reserve (FRB) left the federal fund (FF) interest rate guidance target unchanged at 5.25-5.50% at the Federal Open Market Committee (FOMC) held from 30-31.
The statement stated that “there has been further steady progress toward the 2% target” regarding inflation, and suggested the possibility that interest rate cuts will be implemented as early as the next September meeting.
The details of the press conference held by FRB Chairman Powell after the FOMC are as follows.

* The labor market is in better equilibrium
*Maintains a restrictive stance
* We pay attention to the risks of both sides of our dual responsibilities
*Consumer spending growth is steady but slowing
*Investment in the housing sector stagnated in the second quarter
*The unemployment rate is still low
*Data suggests that the labor market has returned to the state it was before the novel coronavirus pandemic
* Extensive indicators show that the labor market is strong but not overheated
*The inflation rate is still somewhat above the target of 2%
*Long-term inflation expectations appear to be firmly entrenched

* As the labor market calms down, the inflation rate has declined, and risks continue to shift to a “better balance”
*There is a need to deepen confidence in reducing inflation
*Inflation indicators for the second quarter have boosted confidence in price stabilization
*We will carefully verify the data to be obtained for future decisions
*Take action to promote dual responsibility
*The FRB's policy is in a good position to address the risk of dual responsibilities

* No decision has been made yet (regarding interest rate cuts in September)
*No decisions have been made about future meetings
*We rely on data, but we don't rely on data points
*The focus is on whether the data is consistent with inflation and growing confidence in employment as a whole
*Interest rate cuts may be considered in September
*Interest rate reduction phase is approaching
*We are getting close in a broad sense, but we haven't reached that stage yet
* If inflation falls rapidly or moves as expected, and growth is moderately strong and the labor market matches the current situation, there is a possibility that interest rate cuts will be considered in September

*If inflation disappoints, estimate it
*We don't make decisions based on one thing
*The totality of all data, including inflation, employment, and risk balance, helps in decision making
*More better data is needed
*The past two or three inflation indicators have raised confidence
*More good data is needed to gain greater confidence
* We have gained confidence, and if we get more good data, our confidence will increase even more
* The number of interest rate cuts within the year depends on economic trends, and all kinds of scenarios can be imagined from 0 to multiple times

*Labor market data shows gradual normalization
*We have returned to a state where employment and inflation targets are given equal importance
*Currently, the labor market is not viewed as a factor of inflationary pressure
*We don't want excessive calming of the labor market
*There has been steady progress with respect to inflation, and confidence in the path to 2% is growing
* If the labor market deteriorates drastically, we will respond
*It is necessary to balance the two risks

*The labor market is in the process of normalizing
*It is necessary to keep a close eye on what the data suggests　
*The economic indicators released today were slightly weaker than expected
* The data we are seeing in the labor market is consistent with the process of normalization
*The time has come to adjust policy interest rates to support the ongoing process
*You don't need to aim 100% for inflation
*Work on inflation is not finished, but there is room to begin easing policy interest rates
*The pace and timing of interest rate cuts will depend on economic conditions, and there is no guidance

*Wider disinflation is currently occurring
*The situation surrounding inflation has improved slightly from last year and is widespread
*The quality of current disinflation has improved
*Further disinflation is necessary to gain more confidence
*The economy is not overheating
* Confidence is strengthened that the economy is not overheating due to the easing of labor market conditions
*Current inflation indicators are much better than a year ago
* It is necessary to focus on this progress and examine the risks to employment and inflation more equally

*The upward risk of inflation has decreased
*The downside risks of employment-related liabilities are now real
*The FRB's monetary policy is clearly restrictive
*The right time to start cutting interest rates is coming
*A lot of data will be announced from now until September (next meeting)
*We are keeping a close eye on private sector demand
* Balances risk too early and risk too late
*We are being forced to make very difficult decisions about interest rates
*All 19 participants supported this decision
*The pros and cons of interest rate cuts were seriously discussed at this meeting

*The majority supports that interest rates are not changed at this meeting
*The effects of the policy have begun to appear in the economy in the past 6 months
* I am getting a good feeling about the current situation
*If economic weakness is confirmed, there is considerable room for response
*Wage growth remains high
*The number of job offers is still at a historically high level
*Although partial weakness can be seen, the economy does not appear to be very bad
*No decisions have been made regarding future meetings
*We will not change our approach depending on the political schedule

* We do not use our tools to support or oppose politicians or political parties
*What the FRB does before, during, and after an election is based on a balance of data, forecasts, and risk
*The FRB is a non-political organization
*Policies are never decided based on the results of elections that have yet to come out
*There are always meaningful differences of opinion within FOMC
* (Interest rate cut by 0.50% points) is not currently being considered
*Some participants examined the arguments for moving at this meeting
*Overall, the view is that it won't work at this meeting, and if it works, if it is supported by data, at the next meeting
*There is no doubt that this is now our basic scenario

*The time to cut interest rates is getting closer

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