Jerome Powell on Inflation Expectations and Fed Policy Stance

Inflation Trends and Expectations

• 📈 Core PCE inflation was 2.9% in August, showing a slight increase from earlier in the year.
• 📦 Rising core goods inflation has outpaced disinflation in housing services, with goods price increases primarily attributed to tariffs.
• 💡 Near-term inflation expectations have generally increased this year, while most longer-term measures remain aligned with the 2% goal.

Economic Outlook and Policy Risks

• ⚠️ The assessment of risks has shifted due to rising downside risks to employment.
• 🎯 The Federal Reserve judged it appropriate to move towards a more neutral policy stance in September.
• ⚖️ There is no risk-free path for policy, balancing employment and inflation goals.
• 📊 The dispersion of committee participants' projections highlights the range of potential outcomes.

Approach to Policymaking

• 🔍 Policy will be set based on the evolution of the economic outlook and balance of risks.
• 🛤️ The Fed will not follow a predetermined path but will adapt its approach meeting by meeting.