Jerome Powell, Speech/Q&A: Semiannual Monetary Policy Report to Congress (House)

Fed Funds

“Again, we have not made any decision about the March meeting. We’re not going to do that until we see the additional data. The larger point though is that we’re not on a preset path and that we will be guided by the incoming data and the evolving outlook.”

“Yeah, as I said in my testimony, we look at the data since January and also the revisions to the November and December inflation data and they suggest that the ultimate level of interest rates is still higher than we’d expected.”

Terminal Rate

Question – will the terminal rate be between 5.00% and 5.50%? “My colleagues and I will write down new forecasts and release into the public on March 22. But as I mentioned in my testimony, the data we’ve seen so far this year suggests that the ultimate level of rates will need to be higher. But we still have some more data to come in between now and the meeting. But as of today, it suggests a higher level than that.”

Inflation

Monetary Policy Lags: “We are very well aware of the lags with which monetary policy affects economic activity and inflation. Those are long and variable, and I would stress highly uncertain. There is nearly no agreement on exactly how long they are. But we know that slowing down the pace of rate hikes this year is a way for us to see more of those effects as they come in.”