Fed holds rates steady, signaling risks to economy are dropping

Fed holds rates steady, signaling risks to the economy are dropping.

The Fed has kept rates steady, and the risks to the economy are receding; they pull you back in. Yeah. Look, I wish you would. I'm stuck in it.

Is there a good time? Yes, that's it. There's a build-up there. Good. Okay. Okay. That's true. Is that crazy? How are you? Yeah. Great.

What? Think fire. Hello everyone. When the news conference begins, the Chair will make a brief opening statement and then take questions. If you have any questions,

So please raise your hand and stand by this table. This may happen while you wait. Which one is your favorite? Any are fine.

Two minutes. This is amazing. Good morning. Oh, my colleagues and I are fully focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people.

The U.S. economy expanded at a solid pace last year and is on a strong footing in 2026. While job growth has been subdued, the unemployment rate has shown some signs of stabilizing

And inflation is somewhat elevated. Today, in support of our goals, the Federal Open Market Committee decided to leave our policy rate unchanged. After cutting our policy rate by 75 basis points over our previous three meetings

We view the current stance of monetary policy as appropriate to promote progress toward both our maximum employment and 2% inflation goals. I have more to say.

After a brief review of economic developments, let me turn to monetary policy. Available indicators suggest that economic activity is expanding at a solid pace.

Consumer spending has been solid, and business fixed investment has continued to expand. In contrast, activity in the housing sector has been weak.

The temporary shutdown of the federal government likely had an impact on economic activity in the last quarter, but those effects should be reversed as the reopening supports growth in this quarter.

The unemployment rate was 4.4% in December and has been little changed in recent months. Job growth has been subdued. Total nonfarm payrolls have fallen by an average of 22,000 per month over the past three months.

Excluding government employment, private payrolls increased by an average of 29,000 per month. The pace of job growth over the past year

Much of the slowdown reflects a slowdown in labor force growth due to immigration and lower labor force participation. Labor demand, however, has also softened markedly.

Other indicators, including openings, layoffs, hiring, and modest wage growth, show little change in recent months. Inflation has fallen significantly from its mid-2022 highs,

but remains somewhat elevated relative to our 2% long-term objective. Estimates based on the consumer price index indicate that total PCE prices rose 2.9% during the 12 months ending in December, and core PCE prices, excluding the volatile food and energy categories, rose 3.0%.

These elevated readings largely reflect inflation in the goods sector, which has been exacerbated by the impact of continued volatility in the services sector. Near-term measures of inflation expectations

have declined from their highs last year, as reflected in both market and survey-based measures. 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 3.5 and 3/4 percent. Since last September, we have cut our policy rate by 75 basis points, or 3/4 of a percentage point,

and brought it within the range of possible estimates of neutral. This normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2%.

With the impact of the tariff hikes having passed, we are well-positioned to determine the extent and timing of additional adjustments to our policy rate based on incoming data, the emerging outlook, and the

and the balance of risks. Monetary policy is not on a pre-determined course, and we will make our decisions on a meeting-by-meeting basis. To conclude, the Fed has two goals for monetary policy.

Maximum employment and stable prices. We are committed to supporting maximum employment, bringing inflation to our 2% objective on a sustainable basis, and keeping longer-term inflation expectations well-aligned.

Our success in achieving these goals is important to all Americans. We expect the Fed will continue to do our jobs with objectivity, integrity, and a deep commitment to serving the American people.

Thank you. I look forward to your questions. Hi, Chris Rigber at the Associated Press. Thank you. Um, I wanted to ask, you know, you attended the Lisa Cook hearing at the Supreme Court last week.

uh and Treasury Secretary Scott Besson made political criticism of that. Can you tell me why you attended and what you would say in response to the Secretary's criticism?

So, let me start by saying I don't respond to other officials' comments, whoever they are. It's just not appropriate to do so. I'll tell you why I participated.

Um, I would say that this case is probably the most important legal case in the 113-year history of the Fed. And I thought about it, I thought, why didn't I participate?

It's probably hard to explain. Uh, also, um, Paul Volcker went to a Supreme Court case that I think was famous in 1985 or so.

So that's ideal, and I thought that was an appropriate thing to do, and I did it. Great, and then immediately follow the job market. Uh, you mentioned last month that the household survey could be skewed.

Um, and you also mentioned the possibility of haunted jobs, which would show that we're still in a negative hiring trajectory. Um, so do you see the unemployment rate coming down

And what is the basis for me to say that things have stabilized? Thank you so, yeah, really two questions. One is that we are going through data distortions from the shutdown.

They get smaller in December than they were in November. So, we are getting to a point where they are no longer material. They are still there,

But it is a tweak here and there. Um, the reason why we changed the statement, let me get it out. Um, you were just uh, we were saying that there was an increase in judges cutting jobs in recent months.

So, we have seen, you know, data coming in that gives some indication of stabilization. I won't go too far with this, but there are some signs of continued cooling in some of the signs of consolidation.

And we thought that the data was no longer a good explanation, and the outlook for economic activity has clearly improved since the last meeting.

And that matters for labor demand and employment over time. So for those two reasons, we thought we would take that language out of the statement.

NickNick Timos, Wall Street Journal. Oh, Chair Pell, you've generally avoided getting directly involved in political controversy, and the video statement on January 11 was a departure.

What made this different, and are you concerned that it could draw the institution into further political debates? So, today I'm just going to point you to the statement that I made on January 11.

I'm not going to expand on it or repeat it. So, uh, I'm not just going to go into this press conference and and and, the economy and what we did today, but something else related, but I'm not going to get into that.

Can you say whether the Fed has responded to the subpoena?

I don't have anything for you today. Mike, Michael McKay from Bloomberg Radio TV. Have you decided whether you're going to stay on as governor of the Federal Reserve? And if so, can you tell us what it is? And if not, when can we make a decision?

Uh, no. And I really don't have anything for you again today. Oh, why do you want to leave at all under the circumstances? Again, I uh I don't want to get into that.

That's not something I'm in the time and place for those questions, and uh, but it's not something I'm going to get into today. Thank you.

Um, Claire Jones, Financial Times. Thank you very much for taking my questions. Um, another one that, you know, could lead to a similar response. Um, we've seen quite a big move in the dollar in recent days. What do you think

Is driving the US currency down, and are you concerned about the extent of the volatility this week? Thank you. So, Claire, as you probably know, you know,

We don't really comment on the dollar. The administration, particularly the Treasury Department, has the job of overseeing the currency and so on, and the exchange rate and all of that.

We don't comment on that. That's not our usual role. So I don't have anything for you. But I mean, what's your view on the market movement?

I mean, what's your thinking behind them? Are these asset managers diversified? Is that, yeah, I just don't know you, we don't talk about the dollar.

We don't talk about what moves it. Um, I just don't think it's appropriate to do that. That's really up to the Treasury Department.

That's their role, their bailiwick, and we stay out of it. We do monetary policy and some other things, but we don't comment on the dollar.

Sorry, Neil. Hi, Chrissy Paul. Neil Irwin with Axios Um, obviously no SCP at this meeting, but in light of the slightly firmer language in the statement about labor market growth,

Should we assume that the timeline for any further cuts has been pushed back compared to what people might have thought in December? Well,

First of all, if you look at the data that has come in since the last meeting, there is, um, a clear improvement in growth. The data has come in, and the gray book shows the sentiment of everything that this year is starting on a solid footing for growth.

Oh, inflation performed as expected, and as I mentioned, some of the labor market data suggests that you know we are in evidence of consolidation.

So it's a strong forecast overall if that's your question. Um, I'm not sure I answered your question. uh but but in terms of the uhtiming or pacing of any additional easing.

So we didn't tell you what we would say about that after this meeting, after three recent rate cuts, we were well-positioned to address the risks that we believe are there on both sides of our dual mandate, and we will continue to meet and make our decisions based on the data that comes in.

We haven't made any decisions about future meetings, but you know, the economy is growing at a solid pace. The unemployment rate has been broadly.

stable, and the inflation rate has been somewhat elevated. So, we'll look at our objective variables and let the data guide us. SteveSteve Leeman, CNBC, and stick with questions that you can answer.

Thank you, um. You said earlier that I believe the current policy rate is at the high end of neutral, and if you look at the SCP and the long-term rate,

16 of the 19 officials are actually below that in their long-term. Is the Fed still in the process of getting it to the mid-range of neutral, and what will it take to get there?

So, what I counted was that four out of 19 were at or above that. I might have missed one, but I thought it was four.

Um, and if you look at the U.S. dealer survey, it was 10 out of 58 where we were at or above that. So, you're right. This is the high end of the range.

What we say is that it's within the range of reasonable estimates. This is the high end of that range, but it's for some people, they think it's neutral, I think.