MNI: Powell Excerpt: Still Uncertain on 2020, 2021

     WASHINGTON (MN) - The following is a response of Federal Reserve Chairman

Jerome Powell to a question from a reporter at his press conference following

Wednesday's Federal Open Market Committee meeting.

     Question: Financial conditions are still extremely loose by all the

measures that track that. 

(McKEE) the trend shows a decline in short-term borrowing rather than

treasuries. I wonder if that changes the way the fed tightening effects the

economy. 

     Along those lines, you dropped the word accommodative doesn't suggest a

change in policy, but if you are dropping forward guidance in terms of

accommodative, does the dot plot really serve any purpose anymore if, as you

say, you can't be confident out to 2021, what's going to happen with the

economy?

Powell: A couple questions in there. The dot plot, I mean, it's not new. 

I don't think it's a new point that forecasting two or three years out are

fairly uncertain. The dot plot is individual FOMC participants who are writing

down their individual views on the evolution of the economy and of appropriate

monetary policy. 

     We don't vote on that. These are individual forecasts. I think market

participants generally find that interesting information, and so it seems to me

to be serving a purpose. I think the point with accommodative was that its

useful life was over. You know, we but that in the statement. In 2015 just when

we lifted off and the idea was to provide assurance that we weren't trying to

slow down the economy, but that, in fact, we were still -- 

interest rates were still going to be pushing to support economic activity...

      You know, if you look at a broad financial conditions index, that's pretty

much the answer you'll get. We don't control that, and as I mentioned earlier,

we do take financial conditions into account in what we do, and financial

conditions are affecting the broader economy. By definition, we're taking them

into account. If you look at interest rates, you know, interest rates -- look at

long-term interest rates this year and short-term interest rates this year. Very

significant increases. You know, with your long and variable lags, that should

be having an effect over time. 

--MNI Washington Bureau; +1 (973) 494-2611; email: harrison.clarke@marketnews.com

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