Powell Pleased With Reception of Policy Framework Shift

Q: On the vaccine, has the Fed modeled when the US might reach herd immunity? And how do you connect no-movement on the balance sheet today with the fact these steps show 3 years of inflation <2%?

• A: Re vaccine, we do estimates on herd immunity, based on assumptions - possible in the middle or 2nd half of next year. It's not going to be precise, all depends what your assumptions are.- Re inflation - "you have to be honest with yourself about inflation these days".
• There are significant global disinflationary pressures that persist today, it's not going to be easy to have inflation move up and it's going to take some time. We are honest with ourselves and with you, in the SEP, that it will take time, those are the underlying dynamics.
• One reason that we have adopted the flexible avg inflation targeting framework. That is why we are aiming for overshoot and it will take time to get there.
• We are thinking this could be another long economic expansion and we are going to keep policy highly accommodated until the expansion is well down the tracks and we are not going to preemptively raise rates until we see inflation reaching 2% and being on track to reaching 2%. That is a strong commitment. We think that is the right place to be.
• We're pleased with the reception our framework has gotten in markets. Markets have found this credible.