MNI TRANSCRIPT: Powell on Changes to Inflation Framework

     WASHINGTON (MNI) - The following is the portion of a transcript from

Federal Reserve Chairman Jerome Powell's press conference after the FOMC meeting

Wednesday:

     Q: I want to ask about the framework review which entails debate around

allowing a overshoot of the 2 percent target, and in that context, it's merely

saying that you want inflation to rise above 2 percent a sufficient strategy,

for getting inflation to stay the target, or would it compel some kind of policy

action beyond deferring future rate increases to achieve that outcome, if that

is the direction in which the committee goes. In other words, it's one thing to

accept inflation rising on its own opportunistically but if inflation does not

materialize, would a change in the framework necessarily make it easier to

generate higher inflation?

     A: I think the answer to the question of whether saying it is enough to

create credibility, the answer to that is no. I think you have to back that up

with policy that supports the outcome. That is what we are trying to do. The

changes that we are looking at to the framework are, I think they take all of

that on board, and but what they are designed to do is to strengthen the

credibility of that inflation target, but only if followed by policy.

Ultimately, it will take time to establish, to move inflation expectations up

from where they are which appears to be a bit below 2 percent, will not happen

overnight. It will have to happen over time as credibility is built. The fed has

great inflation credibility, but inflation expectations are anchored at about

their 25 year average which is a few ticks below 2 percent.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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