Good afternoon. My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. The US economy has been expanding at a solid pace. While job gains have remained low, the unemployment rate has been little changed in recent months. Inflation has moved up and is elevated, in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook, and we will remain attentive to risks to both sides of our dual mandate. I'll have more to say about monetary policy after briefly reviewing economic developments.
Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak. In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. Job gains have remained low. A good part of the slowing in the pace of job growth over the past year reflects a decline in the growth of the labor force due to lower immigration and labor force participation, though labor demand has clearly softened as well. Other indicators, including job openings, layoffs, hiring, and nominal wage growth, generally show little change in recent months.
Inflation has moved up recently and is elevated relative to our 2% longer-run goal. Estimates based on the consumer price index and other data indicate that total PCE prices rose 3.5% over the 12 months ending in March, boosted by the significant rise in global oil prices that has resulted from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the goods sector. Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longer-term expectations remain consistent with our 2% inflation goal.
Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and 1/2 to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation. Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks. Monetary policy is not on a preset course and we will make our decisions on a meeting-by-meeting basis.
This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Warsh on his advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues. The Federal Reserve exists for one fundamental purpose: to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose. Our decisions reflect the collective judgment of the Board of Governors and the Federal Open Market Committee, colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission. This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the Board of Governors and around the Federal Reserve System. The Fed's work is only as effective as the public's understanding of it, and you, the press, are essential to keeping the public informed about what we do and why. The people we serve benefit from your careful reporting.
I welcomed the announcement last Friday by the US attorney for the District of Columbia that she had closed the criminal investigation. She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's Inspector General. And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas.
I've said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve. After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There is only ever one chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that chair. Once sworn in as Board Chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people. Thank you and I look forward to your questions.
Thank you, Mr. Chair. I appreciate the kind words about the press. It often doesn't come from the podium in different places, but I appreciate that. Can you talk about what has gone into your decision to remain on the board? What kind of criteria are you weighing and how long might you stay?
I want to note here, this has nothing whatever to do with verbal criticism by elected officials. I've never suggested that such verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113-year history and there are ongoing threats of additional such actions. I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors. It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way, free of political influence. It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the envy of the world. That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party. It's critical for the people that we serve. In terms of when I would leave, I will leave when I think it is appropriate to do so.
Well, I just have a follow-up, which is what would you say to the criticism that by remaining on the board, you're actually taking a political act in denying President Trump the majority of the board, which as president he would have if you left.
I don't see that at all. As I mentioned, I'm literally staying because of the actions that have been taken. I had long planned to be retiring and the things that have happened in the really in the last 3 months have left me no choice but to stay until I see them through at least that long. In addition, I don't see how this will interfere. My intention is not to interfere. I was a governor for almost 6 years and the tradition is at the Fed that governors who understand how difficult the role of chair is, and as a soon-to-be former chair, I do understand how hard it is to get consensus with 19 strong-minded people, you work with the chair, you try to be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take, and that's the attitude that I'll take.
Nick.
Chair Powell, if I could ask about the inflation outlook. In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermeeting period, beginning with the prospects for tariff pass-through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, I would look at it this way. For a long time, we've been working on the hypothesis, really, that tariffs would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change, so measured inflation wouldn't reflect that higher level going up more and more. And it's time for that to happen. We really do expect that to be happening in the next two quarters. So, we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We need to really see that. With energy, it's so hard to say. I mentioned, you know, in the textbook, you would look through an oil shock because they tend to be short-lived and they tend to revert. And monetary policy works with long and variable lags, so you wouldn't necessarily react right away. I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock. So, I think we're going to be very cautious about that. But the question about looking through energy really is not in front of us right now. It hasn't even peaked yet. And I think we'd want to see the backside of that and progress on tariffs before we even thought about reducing rates.
If I could follow up, the statement today preserves language that has taken on some meaning as it was socialized when the committee was actively lowering rates. Why is that easing bias still ripe given how different the inflation outlook is now versus a meeting or two ago? And what more would have to happen for it to get evicted?
So, that was, as you will recall, we had a discussion about that at the last meeting and we talked about it in the press conference after the March meeting. We had the same today. We had quite a vigorous discussion about that very issue and the guidance and is it still appropriate and that kind of thing. And I would say that the number of people on the committee who either could support that language change, changing to a more neutral stance so that a hike is as likely as a cut, that number has increased over the intermeeting period, and it's easy to see why. It's a good question, right? You see inflation has moved up over the interim a bit. Core inflation's 3.2 now, moving, albeit just a little bit, in the wrong direction. And we know that there will be headline inflation coming out of the Gulf and we don't know how much that will be. We're going to need to see. So, it makes all the sense in the world that people would look at that and we'd have a vigorous discussion about that. You saw the three people dissented over the language. I think all of those people agreed with the rate decision. So, the majority of the committee did not want to do that and I didn't think we needed to do it this meeting. It really was just a question of why do we need to do that now? We have so much to learn. There's so much uncertainty about the path ahead. There doesn't need to be any rush to make that decision now because what happens in the next 30, 60 days, even by the next meeting, could really change the picture around that language. So, it's a much closer thing on the committee than it was in March. And that makes all the sense in the world, it seems to me.
Claire.
So, Claire Jones, Financial Times. Just going back to this issue of the easing bias. We've now got oil approaching $120 a barrel when it comes to the benchmark Brent crude. If it stays around those levels 6 weeks from now, what would be your best guess as to whether the easing bias will still be in the statement?
I wouldn't want to guess. First of all, we're going to have new leadership in all likelihood by then and new leadership's going to have a very important role to play in that, so I won't be standing at the podium to answer your question, so I don't know. As I mentioned, that's all I can really say is that we had a great discussion about that today. It's gotten to be a better question in the interim period. We had the discussion. A majority are still on the page of not feeling the need to move to that level, and that's where I am. I get it, though. At a certain point, you would move, and that conceivably could come as soon as the next meeting.
Thank you. Just to follow up, the new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
I'm not going to give him any advice through you today here, but I think communications generally is, I think every incoming chair takes a look at communications, and it's a very healthy thing. Communications is very complex and you can always be looking at new things. And if that happens, feels like it's going to happen, that's a completely appropriate thing.
Neil.
Hi, Chair Powell, Neil Irwin with Axios. Can you tell us if you've been in touch with incoming Chairman Warsh? To what extent is this a normal transition process versus all the things swirling around, something unusual? And what can we expect when he takes that podium in a few weeks?
I haven't seen him since seeing him at a dinner in January where I congratulated him and had a nice chat with him. Haven't seen him. I don't know what a normal process is. The last process was with Janet Yellen, with whom I had worked for 6 years, and so we were sitting down the hall from each other, so it was a very different thing. I think this is and will be a very normal, standard kind of a transition process. So, that's what I expect. I have every reason to think it will be.
Quick follow-up, is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned.
Chris.
Hi. Thanks for taking our question. I wanted to ask a question about your tenure, and I'm Chris Rugaber at Associated Press. During your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment. In the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Are you worried that the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market? And should they be?
I don't know the answer to that. What we experienced in the mid-teens was really low levels of unemployment for a long period of time and no reaction from inflation. And we all very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum. And we had many, many reports of, it felt like a fairly stable equilibrium, and a lot of benefits were flowing to people at the bottom end of the income spectrum, including companies were setting up in, you know, people who were confined and training them before they got out, and it was a very healthy sort of set of societal dynamics. So, of course, I think anybody would love to get back to that. I don't think that anything that happened to create the global pandemic inflation was in any way related to overweighting the employment market. It was a global shock that happened essentially very, very similarly all over the world that had to do with closing, reopening, stimulus, and all that. And you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France, and things like that. So, I don't think that that insight was in any way responsible for the high inflation that we experienced. So, I think it's always been a balance. You've got to be strong on both of our dual mandates. And we just, for example, now we don't feel that the labor market is at all a source of inflation, so we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually, during the pandemic recovery, the labor market was super overheated and tight, and that's when we had to worry about it, but not now.
And just on the other issue, do you need more insurance from the Justice Department before stepping down? Is that what you're waiting for or what else?
I'm waiting for the investigation to be well and truly over with finality and transparency. And I'm waiting for that. And will leave when I think it's appropriate to do so.
Michael McKee.
Michael McKee from Bloomberg Television and Radio. I'd like to ask you if you could explain it a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the Open Market Committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough. Is there any sense that interest rates might have to go up or was this just a setup to sort of warn people that you're worried about the war impacts?
So, nobody, the three dissenters and others who could have supported that and others who were voters and non-voters who preferred it, they all supported the rate decision, right? So, people are not saying we need to hike now. It's more a question of don't we kind of feel that we should be neutral and what are markets doing? People argued that this is consistent with what markets are doing. And again, it's a very fair question, but these changes, it's a form of forward guidance and you want to make them in a way that will be sustained and continue to make sense and not something you need to take back fairly quickly. So, I think a group of us, including me, didn't feel like we needed to be in a hurry on that, that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too, as I mentioned, it's a perfectly good argument to be having, good discussion to be having. So, and it came out the way it came out.
Well, you've got three dissents in favor of two-sided warning. You've got yourself staying on the board. You've got the criticism that does come from elected officials. And you've got a lot of critics who have faulted the Fed for being too slow in 2021 with inflation. Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on?
Not driving my thinking now. Monetary policy is going to get made by 19 people. There's a lot of stability there. I mean, if you think about it, every new Fed chair has the same situation which is you got 18 colleagues on the FOMC. 11 of them vote during any year and your job is to create consensus. It's to talk to them, understand them, be inside their thinking and be able to pull them together and get consensus and move. And that's what every Fed chair has to do. And I think Kevin Warsh is actually quite well, he has the capabilities, skills to be very good at that, I would think. So, I'm not so worried about that process. I think that'll work itself out.
Howard.
Thank you, Chair Powell. Howard Schneider with Reuters. You mentioned that staying on as a governor you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can, what that looks like and particularly around the policy discussion how you're able to have your intervention and not be a shadow chair and not have a kind of an outsized influence over the process.
Yeah, that's just something I would never do, the shadow chair thing. I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I was a governor for 6 years and I know what that's like. I had a pretty front row seat with particularly with Chair Yellen to whom I was close when I worked with Chairman Bernanke for 2 years, but I was brand new at that time. So, I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I don't want to add to that unnecessarily and that means try to support the chair where the direction the chair wants to go in if you can. If you can't, you can't. And I think that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be flexible at all, then how do you ever do that? And so, that's why the chair has the authority the chair has really is to develop relationships with people and work with them and then put something forward that has consensus. And I propose to be a very constructive participant in that process, really out of respect for the office of the chair.
And in your view as a soon-to-be governor, how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was, it seems like the commentary that was coming from particularly some of the Reserve Bank presidents, they were elevated concerns about the bleed into core and here we are with three dissents now. What do you see as the prospect of a core inflation rate?
Those prospects are real. Remember though, our, and they're real and the real thing is we're going to have to wait and see. We're going to need to see. And the good news is I think our policy stance is in a very good place for us to wait and see. We're right kind of at the high end of neutral or perhaps mildly restrictive. The labor market shows more and more signs of stability, whereas inflation is kind of misbehaving and so maybe a little bit of restriction or the high end of neutral is just the right place to be. So, we can wait here and see how things work out before we act. And we'll see how much that, how much does come through into core. You see it already in air fares, of course, but you may see it in many other places. We just don't know yet and it's so unknown because how long will the strait be closed? You can develop any number of scenarios that you want. But we really won't know till we know. So, fortunately we're in a good place to wait and let things develop.
Thanks, Mr. Chairman. You started holding post-meeting press conferences for every meeting as opposed to the ones with just with SEPs. Can you talk about why you see that as a net positive?
So, we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SEP meetings where we had the press conference. So, if you think about it, during the pandemic we were moving a lot at every meeting and sometimes between meetings and doing that without a press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way. I don't know. It's just something people have become used to and I do think it's quite helpful to, I try to deliver a message on behalf of the committee rather than 18 other people going out and delivering their message and it's going to be all over the place because we do thankfully have widely disparate views.
Could you describe the debate last year, what changes were considered, what you wanted, and what prevented any action on those changes?
I'm not going to go into the real small specifics, but what we found very quickly was that making really large changes, for example to the dot plot or the SEP, we couldn't come up with anything that had really broad support on the committee. And so, we just moved on. We didn't really do as much on that as we might have. And you know, I was never the world's biggest fan of the dot plot, but you can't beat something with nothing. We've looked at a bunch of things and, like I said, I think every new chair is going to look at our suite of communications and think about what would be changes. We are the only major central bank that doesn't publish a forecast. And that's because we have a 19-person committee and, you know, you try to do that at the board, that's hard; at the committee, that's hard; it's hard if you do it at the staff. So, it works. I think our communications are fine, but looking at doing it in a different and better way is the most natural thing in the world.
I'm Colby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish outcome for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now? The economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. Inflation was moving sideways even before the war and is now moving higher. So where is the committee at on that debate?
You know, where we're at is we think our policy rate is in a good place. If we need to hike, we will certainly signal that and we will certainly do it. And if we need to cut, then if it's appropriate to cut, then we'll signal the opposite. I think because we feel like we're in a good place to move in either direction, nobody's calling for a hike right now. So, it really is going to depend on how things evolve. And you know, that's really where it is. As I mentioned, much closer question this cycle on changing the guidance, but ultimately we didn't.
