Federal Reserve Leaves Rate Unchanged, Signals Cuts | WSJ

Federal Reserve Chair Jerome Powell spoke about the current state of the U.S. economy at a press conference. Here are the key points from his remarks:

Economic Developments

• Inflation has eased without a significant increase in unemployment, but it is still too high.
• Recent indicators suggest that economic activity has been expanding at a solid pace.
• GDP growth for Q4 2022 was 3.3%, and for the year as a whole, GDP expanded at 3.1%.
• The labor market remains tight, with payroll job gains averaging 165,000 jobs per month over the past three months.
• Nominal wage growth has been easing, and job vacancies have declined.

Inflation

• Inflation has eased over the past year but remains above the Fed's 2% goal.
• Total PCE prices rose 2.6% over the 12 months ending in December, and core PCE prices rose 2.9%.
• Longer-term inflation expectations appear to remain well anchored.

Monetary Policy

• The FOMC decided to leave the policy interest rate unchanged and continue to reduce securities holdings.
• The Fed's strong actions in tightening monetary policy have moved the policy rate into restrictive territory.
• The risks to achieving employment and inflation goals are moving into better balance.
• The timing of any adjustments to the target range for the federal funds rate will be based on incoming data.

Confidence in Inflation Outlook

• More evidence is needed to build confidence that inflation is moving sustainably down to 2%.
• The committee wants to see continuation of the good data on inflation and a sustained path toward the goal.
• The committee is data dependent and will make decisions meeting by meeting.

Balance Sheet

• The balance sheet runoff will be discussed at the next meeting in March.
• The Fed sees the balance sheet runoff as an independent tool from rate cuts.

Conclusion

• The economy is solid, the labor market is strong, and inflation is coming down.
• The Fed's goal is to achieve sustained period of strong labor market conditions and price stability.
• The committee is focused on its public mission and committed to its goals.