MNI TRANSCRIPT: Powell on Core Inflation

     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: if you look at the SEP today, it looks like inflation is never

overshooting 2 percent and is only getting up to 2 percent by the end of 2021,

yet rates are increasing in 2021. How do we square that circle with interest

rates increasing before inflation ever moves up in some meaningful overshooting

way?

     A: I think what you are saying is you have got a full year of the median

being flat which is come dative, modestly accommodative and inflation not moving

up much. That underscores the challenge of getting inflation to move up. The

committee has wanted inflation to be at 2 percent squarely at 2 percent, for

ever since I arrived in 2012. It hasn't happened. It is because their

disinflationary forces around the world and they have been stronger than people

understood them to be. In terms of those outyear rate increases, you are looking

at rate increases more than a year into the future, and people have their own

explanations for why they do that but none of us have much of a sense of what

the economy will be like in 2021. I think what may be behind some of that is the

thought that over time, it would be appropriate, if you believe that the neutral

rate is two and a half percent it would be appropriate for your rates to move up

in that direction. I will also say to you that a number of people wrote down,

and you can't see this at this level of detail, but, today, but a number of

people did write down overshoots of inflation as appropriate, under appropriate

policy.

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

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