Inflation remains elevated. The committee believes that the accumulation of more information will help it determine the policy stance appropriate to ensure a timely return of inflation to the 2% goal. The committee will deliver price stability.
At each policy meeting, my colleagues and I assess the economy by looking out the window. It's what we call interrogating reality to gauge what's really going on. It is not a task that has grown easier. So what exactly do we observe?
Economic growth has strengthened. The GDP increase in the first half of this year was revised up from an earlier estimate of 1.8% up to 2.4%. And the third quarter appears to have brought an even more rapid advance led by healthy consumer spending likely running above 3% growth and business investment likely rising at about a double-digit pace. Capital expenditures are at a historically high share of GDP.
High-tech investment is leading the acceleration, but there's also been a broadening in other categories, and these trends bear watching. What about the jobless rate? The jobless rate is lower than a year ago, and payroll growth is noticeably above last year's pace. The four-week moving average of unemployment insurance claims continues to run at the lowest level in generations.
So on the employment side of the Fed's dual mandate, conditions are quite positive. And yet Americans, of course, are still dealing with inflation that has been running above the committee's objective for close to six years. It's our responsibility to get inflation down. That's the reason the FOMC's discussion over the last couple of days focused mainly on the price stability side of our remit.
Since our policy action in September, we have started to see some changes in financial and credit conditions. They have tightened for some businesses and households, much as we would expect. Market participants are becoming somewhat more discerning in their capital allocations. And while overall financial conditions are tighter, I'm unwilling and unable to call them tight. But broadly, these developments go in the direction of achieving a longer, more durable period of economic growth and price stability.
Over the last couple of days, the committee had a good discussion of the changes in the economic and financial landscape that marked this intermeeting period. We discussed geopolitical developments and fast-moving changes in technology. We observed but were not surprised that financial markets showed bouts of volatility and shifting correlations.
So as we widen the frame to survey the broad economic and financial picture, real activity is clearly pointing in the right direction. That's good news. But inflation is too high. Energy and related prices have moved higher again in recent weeks. And our job is to ensure that relative price changes in some sectors do not broaden out across the economy and that inflation expectations remain as they are anchored.
While these uncertainties are real, there's no lack of clarity in our purpose at the Fed. Since becoming chairman just five months ago, I've been honored to work with FOMC policymakers who are unambiguous in their commitment to stable prices. We've made clear our readiness to act as circumstances require and we have shown our willingness to act.
The information we receive over the coming period will help us determine where we want policy to be. And at every turn, good or bad, our job is to get monetary policy right. And that's exactly what we're doing. Now, with this objective in mind, we've decided on a change in our FOMC schedule starting next fall. We believe eight meetings per year is the right number for the FOMC.
But in 2027, one meeting will focus exclusively on broad monetary policy strategy with neither a vote on the federal funds rate nor a policy statement anticipated. The rest will be regular FOMC policy-setting meetings. And I expect that in 2028 we'll have two meetings dedicated to discussions of strategy and six for setting policy.
Now what's the reasoning behind this change? To me it's quite straightforward. Getting policy right involves assessing near-term developments at timely, regular, and information-rich intervals. But it's equally important we reserve time and space as an intellectually diverse group for strategic deliberations, for thinking anew about big questions looking out over longer time horizons, focusing, as I say, on the left side of the decimal point.
I believe the setting of the meeting schedule and agenda is more than some administrative detail. It's an institutional choice affecting the nature and the quality of our deliberations and ultimately the wisdom of our decisions. It's yet another change to get the conduct of monetary policy on the right track. I appreciate your attention this afternoon. Now my time is yours and I welcome your questions.
Thank you. Ki Smith with the New York Times. There's been essentially no progress toward the 2% inflation target. The labor market remains stable as you suggested in your opening statement and most of your colleagues seem to be on board with raising rates in December. So why not just raise rates today?
So it's a good question. I will say I read your stories the last day or two so I must admit I sort of saw that question coming. What I said in my prepared statement was information coming in the coming period will help us tell us where we want to be, but I suspect you want a little more than that. So let me give it a shot. Ensuring price stability, Colby, quashing inflation, is not about some fixed individual date on a calendar. Same way it's not about some isolated data point.
If it were about those two things, this job would be easier and we wouldn't be suffering from nearly six years of inflation above target. So what's this about? It's about ensuring we have clear objectives and it's about a monetary policy strategy which might sound to your ear and others like a change from the last several years. So let me step back. In the five months or so that I've been around, we've put in place what I describe as new monetary medicine. Well, what's been in that package of medicine?
First thing we did when we showed up with my colleagues is we doubled down on the 2% inflation target. We said, 'We own it. We're taking responsibility for it. And if you think that we're tolerating some inflation target somewhere in the twos, let us disabuse you of it.' That was the first part of this new monetary medicine. Second part is we took responsibility. No anguish of central banking here. No blaming others.
It's a third thing that we've done. We laid out for you and the world our framework. I did it in Jackson Hole, was part of the discussion the last couple of days, is the framework that many of my colleagues share too. This is how we think about how monetary policy should work. These are the transmission mechanisms and this is how we're going to deliver. Then what do we do? We interrogate reality. We do that periodically. That's a very useful thing to do. But we don't just talk, we act. And so in September when we last met, we acted. We removed a dose of accommodation.
So what are the signposts about how this new strategy is going? Inflation compensation as measured by swaps prices, many other measures. Inflation compensation is going in the right way. Inflation expectations. The world is quite unsettled. If you'd say absent the Fed, what would have happened to expectations? They might have gone the wrong way. They've gone the right way, too. So, I feel good about those signposts. The period right in front of us is information-rich.
There is a lot that's happening in the world. My colleagues and I are keen to take notice of it. So, in this coming period, what do I think we're going to be able to do? We're going to be able to figure out what's the appropriate protocol as part of this package that we started five months ago to deliver price stability. I'm encouraged by the progress we've made in a short period of time. But if the crux of your question is you haven't delivered yet, you haven't achieved price stability, you're right about that, but we're working on it.
Thank you, Chair Warsh. So if I could, the statement says that the accumulation of more information will help the committee determine the policy stance appropriate to ensure a timely return of inflation to the 2% goal. Does that mean that the current level of the Fed funds rate might already be the right one?
Well, we've got to determine the appropriate protocol. If you were listening next to me in that room the last couple of days, the overwhelming consensus, the overwhelming judgment is that what we've done in this modest medicine is starting to work some, but there's no firm conclusions. If we had a firm conclusion about the conduct of monetary policy, we'd announce it to much fanfare today. What we decided to do was, to Colby's question, take stock of where we are, evaluate what we're seeing out the window, ask ourselves whether the period right in front of us is likely to provide more clarity on the appropriate protocol. My judgment, the judgment of my overwhelming number of colleagues, is that it would.
Mr. Chairman, thanks for taking our questions, but before the meeting, several members of the board and the committee went out and told us that it was going to take more time and that had a profound effect on the outlook for the funds rate. Were you involved in discussing that message with them? And if you don't mind, I'm sorry, but a protocol question. What will be the public disclosure on the meetings where you're not going to have a statement? So, two questions. I'm sorry.
So, two questions. Did you not hear the one question rule?
I did, but I thought there was like a protocol thing I could do.
I would, that was like a parliamentary procedure question you were asking. That didn't count. I hesitate to indulge the second question. I fear what it would do, but let's see if I can do it and not have the slippery slope among us. Your first question was about my colleagues. I've got 18 quite independent colleagues. If you were inside that room the last couple of days, you would come to believe that to be true. One way to test the independence of my colleagues is, I don't know if you've heard, Steve, but I don't submit a dot. I don't plan on submitting a dot, but the 18 of them do.
To suggest somehow that I am some kind of all-knowing person sending messages out, that's not the committee of the FOMC that I know. These are serious, sober, responsible people. We had a serious, sober discussion. So that's the answer to that. On the parliamentary question, which doesn't count as a question, I'll just say this. We've made a decision that at that strategy meeting in '27 and the two strategy meetings in '28, I do not anticipate making any policy decision, putting out a policy statement. But what might we come out with? It's not obvious yet. There's more news to come on that.
The decision on the new format for the meetings is relatively new. It was a robust discussion over a couple of meetings of how to handle that as we get details of that, which are still now not until next fall. We'll be prepared to share them with you.
Hi, Nicole Good with Barron's. Thanks for taking my question. In September you mentioned that the Fed has a role in sustaining the economic progress happening in America right now and in the rising opportunities that come with it. I'm wondering if you can expand on whether you see this as a mandate and how you intend to fulfill that mandate.
So the mandate was given to us by Congress. The mandate was deliver stable prices and deliver full employment all in the context of financial stability. Now, they gave us some other homework to do on supervision and regulation and payments, but I presume you're talking about monetary policy. So, what's the best thing we can do in this environment looking at our window to deliver on that remit? Ensure stable prices.
I mentioned, I think at a prior press conference, if you were trying to do the most harm, the least well-off among us, you would let the last six years of inflation above the Fed's target, usually well above the Fed's target, you'd let that continue. So, that's the most important thing we can do as we look out the window. And that's what we plan to do. You probably heard me say this, we will deliver price stability. No ifs, ands, or buts. And that continues to be the case.
Eleanor Mueller with S&P Global wanted to ask you about the working groups, when we can expect the reports to come out, and if there is anything you can preview for us, whether it's on AI or data or balance sheets.
Sure. These five task forces are hard at work. I have scarcely seen anything that would constitute a final report, but I have done some periodic check-ins with them and I am impressed by the rigor of the intellectual discussions, by the seriousness of the task that we've given them. Now, some of the questions that I asked to kick off the reports, they want to answer those and answer a whole range of other questions which might go to other task forces, but I'm impressed by what they're doing.
I gave them, like I told you, a year-end deadline. I think some, but not all of the groups will probably hit their deadline and turn their homework in on time. But that just begins the process by which we're going to be consuming, which is intellectually serious work. That's a catalyst for us to think anew about productivity and jobs and an inflation framework and what's the best data to help us do our job. How to think about the balance sheet task force. These are huge intellectual investments that I think are going to bear fruits in the next policy conjuncture, unlikely to find their way into this policy conjuncture given the important role as consumers of these ideas that my colleagues have.
But I will have one small announcement. I previewed this when I was at an IMF meeting, much to the chagrin of some of my colleagues around here, on November 16th. The productivity and jobs task force will be doing a field hearing, inviting a broad range of people who have strong views. What are the implications for jobs in the economy near-term, medium-term, long-term? Is this a productivity miracle that's going to happen or will it happen slowly? I know I for one am keenly interested in refining my own views on that question.
But that task force decided they wanted to hear from more people as part of their undertaking. I plan on attending. I might have a few words to say at the outset of that conference. I expect the conference will go three, four hours. It'll be pretty wonky stuff. I don't know how good the material will be for the likes of you and your colleagues. But it's a purpose to do a lot of listening for me to interrogate the reality in front of me. What do experts in their fields think about this? What are the implications for the dual mandate that I referenced to your colleague? Is this going to make it harder or easier for us to achieve price stability over the next several years? What are the implications for jobs medium and long-term, but near-term, too? So, we're going to explore those largely in the public realm on November 16th. I look forward to seeing you there.
Thank you so much. Thank you, Mr. Chairman. James Rosen with Newsmax. You spoke of interrogating reality. Since reality is a no-show here today, I'm going to satisfy myself with interrogating you. You spoke earlier in your remarks here today about how your colleagues are serious and sober people who are committed to price stability. In an event in the Oval Office on October 7 of this year, President Trump said, and I quote, 'Kevin is great, but Kevin's one vote out of a board with numerous people that were put on by Obama and Biden and a couple by me. So, you have a board that would like to see the country do badly in my opinion.' Do you agree with those comments?
So, James, I appreciate the question. I'm not going to be responding to quotes from public officials. What I can tell you is my experience in five months here. We just came out of a heck of a family fight. Serious, sober discussion. I think we came to the right policy decision for this moment. And I'm honored to be here and honored to be the chairman of this group.
Chairman Warsh, Salvador Rios with Bloomberg News. So the economy is strong, inflation is well above 2%. You're saying inflation expectations are going the right way, but surveys show that households expect inflation to remain above the Fed's goal and not just for the short term. You didn't hike today. Aren't they waiting for more data? I haven't really heard the clear arguments as to that decision. So do you worry that with today's decision households may not believe your pledge to bring down inflation clearly and at sufficient speed and instead will read this decision of holding rates steady as a sign that the central bank has in fact a soft inflation target?
Yeah. So what I can do is tell you there's no soft inflation target. There's no implicit inflation target. There's a target of price stability and it's 2% as measured by PCE. It took six years for inflation to have the effect on consumers that you reference, but I would say this. When consumers interrogate reality, they look outside their window too. They go to the gas station too and they see that prices are up. I am not going to be the guy who says that oil prices haven't gone up and when they fill up their tank, they don't see it.
And so inflation's gone up in expectations in the very near term because they're doing what we're doing, interrogating reality. But if you look out over the horizon, if you look at most, but not all, measures, what you see is households, businesses, financial markets, they have the confidence that they should have that this central bank will deliver price stability.
