Powell Says Guidance Shows Fed's Confidence & Determination

Q: SEP does not show inflation above 2%, does this suggest the FOMC is not confident it can hit its goals?

A: "Not at all". Says markets aren't pricing in liftoff above zero either. "I guess there are four exceptions out of a committee of 17 during the forecast period that we don't reach 2% but we get very close to it in the forecast. We reach 2 percent (median) at the end of 2023. "It says that we expect that the current setting of our rates will be, what we expected will be appropriate until such time as we reach 2% inflation and labor market conditions are consistent with our assessment of maximum unemployment and that we're on track to achieve inflation moderately above so that's the test. I don't think there's any conflict between those two because the way they're set up, the projections don't show the out years.

You asked about confidence. I would say this very strong, very powerful guidance shows both our confidence and our determination. It shows our confidence that we can reach this goal and our determination to do so."

It "will take some time" to get back above 2%, with slack in the economy, esp re employment. "It's a slow process, but there is a process there. Inflation does move up over time. We do expect that will continue today and we expect that our guidance is effective. We think that effectively saying policy will remain accommodative until the economy is very far along in its recovery should provide strong support for the economy and get us there sooner rather than later"