Free Trial

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
[TOPICS: MMUFE$,M$U$$$]

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.