Sumber: The Fed | Editor: Hasbi Maulana
STEVE LIESMAN. Mr. Chairman, welcome. Interesting changes in the forecast. A higher growth forecast a full point above the long run. Lower unemployment, 7/10 below the long run. And yet, very little change in inflation. What does that say about what you and the Committee believe about the inflation dynamic, and how is it that in that context, you justify three rate hikes this year, and I sense will be three next year and a full $600 billion, I guess, annual rate decline in the balance sheet? Where's your biggest concern here? Is it in overkill when it comes to rates or underkill?
CHAIRMAN POWELL. So, you’re right that the outlook did improve, as I mentioned and as you was in your question. The Committee's estimates of growth went up. The Committee's estimates of unemployment went down, and it was a very light increase in inflation. And, I think that reflects, essentially, if you think back to the air after the crisis, unemployment was 10 percent. It's now 4.1 percent. You've only seen very gradual upward pressures on inflation and wages despite that very large increase. And, that suggests that the relationship between changes in slack and inflation is not so tight. But, it has diminished, but it's still there. So, I think when you see those small changes in unemployment, that simply reflects the, you know, the flatness of the Phillip's curve, if you will.
STEVE LIESMAN. And, your biggest concern or your biggest risk here, is it doing too much, doing too little?
CHAIRMAN POWELL. You know, I think we're trying to, we're trying to be, to take the middle ground there. So, you know, on one hand, the risk would be that we wait too long, and then we have to raise rates quickly. And, that foreshortens the expansion. We don't want to do that. The, on the other side, if we, if we raise rates too quickly, inflation, then, really doesn't get sustainably up to 2 percent. And, that will hurt us going forward. We need that, and it's, you know, we need to make sure that inflation expectations are anchored at 2 percent. So, we're trying to take that middle ground, and the Committee continues to believe that the middle ground consists of further, gradual increases in the federal funds rate as long as the economy is broadly on this path.
NICK TIMIRAOS. Thanks. I'm Nick Timiraos of the Wall Street Journal. Chair Powell, I want to ask about the symmetric inflation target, what you outlined in your remarks as preventing persistent deviations. I want to understand what symmetry means in the context of inflation being allowed to run above the 2 percent target now that that's part of the projection for, at least for core PCE next year. How do you define symmetric relative to the experience of the past five years? Would the Fed be willing to accept the type of overshoot of its target as it has seen during the undershoot? And, how high above 2 percent is too high to maintain a target that is symmetric? Is it 2-1/4, 2-1/2, 2-3/4? And also, for how long?
CHAIRMAN POWELL. You know, so as you noted, the, what we've said in the longer-run statement of goals and monetary policy strategy is that we would be concerned with sustained or persistent deviations of inflation either above or below. We've also said in minutes and in speeches and in things like that that that is a symmetric objective. So, that's how we think of it. And, I think it's, I wouldn't characterize what we've done over the last five years as tolerating, you know, an undershoot of inflation. We were always pushing toward 2 percent. And, I think that is how we look at it. I can't give you an exact number. It just, you know, it, we haven't agreed on that. It just is that we're always going to be seeking 2 percent inflation. And, in doing that, we're going to be considering, by the way, the other side of the mandate. You know, we have to balance that against the deviation of employment from, unemployment from its goal. And, and, also just the duration of it as well.
JIM PUZZANGHERA. Hi, Mr. Chairman. Jim Puzzanghera with the L.A. Times. Even with the extra fiscal stimulus of the tax cuts, your median growth projection is just up to 2.7 percent, and then this year, and then drops back down to 2 percent by 2020. Is the continued talk in Washington about tax cuts brining growth to 3 percent or higher on a sustained basis overselling their potential impact?
CHAIRMAN POWELL. You know, let me say what that really is. So, it, the Summary of Economic Projections is really a compilation of the individual rate forecasts. The committee made really one decision at this meeting, and that was to raise the federal funds rate by 25 basis points. The Summary of Economic Projections is individual forecasts compiled and written down. And, you've identified the median as 2.7 percent. I would, and that's an interesting statistic I would also say that the central tendency is interesting. The full range is interesting. So, you have a range of views around the table. One of the great benefits of our system is that we do have reserve banks with their own staffs and governors with different views. And so, we discuss these things. So, the committee doesn't vote or agree upon the medians, so you're going to have a range of views. That's really all I can say. 2.7 just happens to be the median for '18, but it doesn't really say, you know, what we think is possible.
CHAIRMAN POWELL. You know, I would say it's hard to say, but it would take, you know, that is well above almost all estimates, current estimates of potential long run growth. It would take, you know, significant increases in productivity and labor force participation to get there.
