Jerome Powell on Inflation, Interest Rates, and Economic Outlook

Economic Outlook and Labor Market

• 📊 Available data suggests the outlook for employment and inflation has not significantly changed since October.
• 📉 Conditions in the labor market are gradually cooling, with layoffs and hiring remaining low.
• ⚠️ Downside risks to employment appear to have risen in recent months.
• 📈 Real GDP is projected to rise 1.7% this year and 2.3% next year.

Inflation Trends

• 🌡️ Inflation has eased from its mid-2022 highs but remains elevated relative to the 2% goal.
• 📈 Total PCE prices rose 2.8% over the 12 months ending in September.
• 📦 Inflation for goods has picked up, reflecting the effects of tariffs.
• ✈️ In contrast, disinflation appears to be continuing for services.

Monetary Policy Decisions

• 💰 The Federal Open Market Committee decided to lower the policy interest rate by a quarter percentage point.
• 🏦 Purchases of shorter-term Treasury securities will be initiated to maintain an ample supply of reserves.
• 🎯 The committee remains squarely focused on achieving maximum employment and stable prices.

Longer-Term Expectations

• 🎯 Most measures of longer-term inflation expectations remain consistent with the 2% inflation goal.
• 📉 The median projection for total PCE inflation is 2.9% this year and 2.4% next year, falling to 2% thereafter.