Powell Says There Is No ‘Hurry’ to Adjust Policy Stance

“With our policy stance significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance. At today’s meeting, the committee decided to maintain the target range for the federal funds rate at 4.25 percent to 4.5 percent. We know that reducing policy restraint too fast or too much could hinder progress on inflation. At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment. And considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will assess incoming data, the evolving outlook and the balance of risks. We’re not on any pre-set course.” Reporter: “Given economic and financial market developments since then, how has your confidence changed in an assessment that says interest rates are meaningfully restrictive?” “I don’t think that my assessment really has changed. I mean, a couple of things have happened. We’ve gotten more strong data, but we’ve also seen rates move up at the long end, which could represent a tightening in financial conditions. I think if we look back over the past year or so, we can see that policy is restrictive. If you look at the effect of high rates on interest-sensitive spending, for example, in housing, and if you look at the achievement of our goal variables, we’re seeing the economy move toward 2 percent inflation and has moved largely to maximum employment. So we really look at the movement toward the goal variables to make that assessment. Now policy is meaningfully less restrictive than it was before we began to cut — it’s 100 basis points, less restrictive. And for that reason, we’re going to be focusing on seeing real progress on inflation or alternatively some weakness in the labor market before we consider making adjustments.”