Powell: I Would Not Go If President Asked Me To Leave

Federal Reserve Chairman Jerome Powell explains the decision to reduce the Federal Funds Target Range (FFTR) by 25 basis points to 4.50%-4.75% following the November meeting and answers questions during the subsequent press conference.

Key Quotes

Fed took another step in reducing policy restraint.
The labour market remains solid.
Inflation has eased substantially.
I continue to be confident that with recalibration of stance, inflation moves sustainably down to 2%.
Unemployment rate has edged down in past 3 months, remains low.
In near term election will have no effect on policy decision.
Economy is hard to forecast beyond near term.
I don’s know timing, substance of policy changes.
Will see where bond rates settle, too early to say where.
Appears that moves in bond rates are not mostly about higher inflation expectations.
Bond rates are reflectinbg growth expectations.
Some of the downside risks to economy have diminished.
Will make a decision on rates as we get to December.
We’re trying to steer between moving too quickly and moving too slowly.
We are on a path toward a more neutral stance.
We have gained confidence on inflation moving toward 2%.
We don’t want to do a lot of forward guidance.
There is a fair amount of uncertainty.
Saying ‘further progress’ suggests we are setting up a test.
The point is to find the right pace, need to find that as we go.
Policy is still restrictive.
We don’t need further cooling in labour market to achieve inflation target.
Today’s decision is another step in process of recalibration.
We are prepared to adjust assessments of pace and destination for rates.
If labour market deteriorates, we could move more quickly.
We expect there to be bumps on inflation.
Overall you see progress on inflation.
Labour market is not a source of inflationary pressures.
One or two bad data months on inflation won’t change the process.
The right way to find neutral is carefully.
As economy remains strong, can try to navigate middle path between two risks.
Policy is aimed at keeping labour market in a good place, and maintaining progress on inflation.
Wage growth is now consistent with 2% inflation, given productivity at this level.
I would not go if President asked me to leave.
The US fiscal path is unsustainable.
Economy and policy are both in a very good place.
There is a risk that we move too quickly, to avoid it you have to move carefully.
The other risk is we move too slowly, and that says, don’t get behind the curve.
We try to be in the middle, manage both risks.
Overall inflation expectations are consistent with 2% inflation.
Our baseline is we will gradually move rates towards neutral.
Rising rates is not our plan.

Market reaction

The US Dollar remains largely on the defensive following the Fed’s decision to lower its rates by 25 bps, as was largely anticipated. The US Dollar Index (DXY) revisits the 104.50 region, fading part of the post-Trump strong climb to the boundaries of the 105.00 barrier in the previous day.