March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

Transcript of Chair Powell’s Press Conference

CHAIR POWELL. 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 economy is strong overall and has made significant progress toward

our goals over the past two years. Labor market conditions are solid, and inflation has moved

closer to our 2 percent longer-run goal, though it remains somewhat elevated.

In support of our goals, today the Federal Open Market Committee decided to leave our

policy interest rate unchanged. We also made the technical decision to slow the pace of decline

in the size of our balance sheet. I will have more to say about these decisions after briefly

reviewing economic developments.

Economic activity continued to expand at a solid pace in the fourth quarter of last year,

with GDP rising at 2.3 percent. Recent indications, however, point to a moderation in consumer

spending following the rapid growth seen over the second half of 2024. Surveys of households

and businesses point to heightened uncertainty about the economic outlook. It remains to be

seen how these developments might affect future spending and investment. In our Summary of

Economic Projections, the median participant projects GDP to rise 1.7 percent this year,

somewhat lower than projected in December, and to rise a bit below 2 percent over the next two

years.

In the labor market, conditions remain solid. Payroll job gains averaged 200 thousand

per month over the past three months. The unemployment rate, at 4.1 percent, remains low and

has held in a narrow range for the past year. The jobs-to-workers gap has held steady for several

months. Wages are growing faster than inflation, and at a more sustainable pace than earlier in

the pandemic recovery. Overall, a wide set of indicators suggests that conditions in the labor

Page 1 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

market are broadly in balance. The labor market is not a source of significant inflationary

pressures. The median projection for the unemployment rate in the SEP is 4.4 percent at the end

of this year and 4.3 percent over the next two years.

Inflation has eased significantly over the past two years but remains somewhat elevated

relative to our 2 percent longer-run goal. Estimates based on the Consumer Price Index and

other data indicate that total PCE prices rose 2.5 percent over the 12 months ending in February

and that, excluding the volatile food and energy categories, core PCE prices rose 2.8

percent. Some near-term measures of inflation expectations have recently moved up. We see

this in both market- and survey-based measures, and survey respondents, both consumers and

businesses, are mentioning tariffs as a driving factor. Beyond the next year or so, however, most

measures of longer-term expectations remain consistent with our 2 percent inflation goal. The

median projection in the SEP for total PCE inflation is 2.7 percent this year and 2.2 percent next

year, a little higher than projected in December. In 2027, the median projection is at our

2 percent objective.

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 4-1/4 to 4-1/2 percent. Looking

ahead, the new Administration is in the process of implementing significant policy changes in

four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these

policy changes that will matter for the economy and for the path of monetary policy. While there

have been recent developments in some of these areas, especially trade policy, uncertainty

around the changes and their effects on the economic outlook is high. As we parse the incoming

information, we are focused on separating the signal from the noise as the outlook evolves. As

Page 2 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

we say in our statement, in considering the extent and timing of additional adjustments to the

target range for the federal funds rate, the Committee will assess incoming data, the evolving

outlook, and the balance of risks. We do not need to be in a hurry to adjust our policy stance,

and we are well positioned to wait for greater clarity.

In our SEP, FOMC participants wrote down their individual assessments of an

appropriate path for the federal funds rate, based on what each participant judges to be the most

likely scenario going forward—an admittedly challenging exercise at this time, in light of

considerable uncertainty. The median participant projects that the appropriate level of the federal

funds rate will be 3.9 percent at the end of this year and 3.4 percent at the end of next year,

unchanged from December. While these individual forecasts are always subject to uncertainty,

as I noted, uncertainty today is unusually elevated. And, of course, these projections are not a

Committee plan or a decision.

Policy is not on a preset course. As the economy evolves, we will adjust our policy

stance in a manner that best promotes our maximum employment and price stability goals. If the

economy remains strong and inflation does not continue to move sustainably toward 2 percent,

we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly or

inflation were to fall more quickly than anticipated, we can ease policy accordingly. Our current

policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing

both sides of our dual mandate.

At today’s meeting, we also decided to slow the pace of decline in our balance

sheet. Since we began balance sheet runoff, our securities holdings have declined by more than

$2 trillion. While market indicators continue to suggest that the quantity of reserves remains

abundant, we have seen some signs of increased tightness in money markets. Beginning in April,

Page 3 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

the monthly cap on Treasury redemptions will be lowered from $25 billion to $5

billion. Consistent with the Committee’s intention to hold primarily Treasury securities in the

longer run, we are leaving the cap on agency securities unchanged. This action has no

implications for our intended stance of monetary policy and should not affect the size of our

balance sheet over the medium term.

The Committee also continued its discussions as part of our five-year review of our

monetary policy framework. At this meeting, we focused on labor market dynamics and our

maximum employment goal. As we have indicated, our review will include outreach and public

events involving a wide range of parties, including Fed Listens events around the country and a

research conference in May. Throughout this process, we will be open to new ideas and critical

feedback, and we will take on board lessons of the last five years in determining our

findings. We intend to wrap up the review by late summer.

The Fed has been assigned two goals for monetary policy—maximum employment and

stable prices. We remain committed to supporting maximum employment, bringing inflation

sustainably to our 2 percent goal, and keeping longer-term inflation expectations well

anchored. Our success in delivering on these goals matters to all Americans. We understand that

our actions affect communities, families, and businesses across the country. Everything we do is

in service to our public mission. We at the Fed will do everything we can to achieve our

maximum employment and price stability goals. Thank you. I look forward to your questions.

MICHELLE SMITH. Howard.

HOWARD SCHNEIDER. Howard Schneider with Reuters. Thanks for your time. So,

two things on sort of the real side here, one inflation and then GDP. How much of the higher

Page 4 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

inflation forecast for this year is due to tariffs and since the policy path remains the same, are you

effectively reading this as a one-time price level shock?

CHAIR POWELL. Okay, so how much of it is tariffs? So, let me say that it is going to

be very difficult to have a precise assessment of how much of inflation is coming from tariffs and

from other -- and that's already the case. You may have seen that goods inflation moved up pretty

significantly in the first two months of the year. Trying to track that back to actual tariff

increases, given what was tariff and what was not, very, very challenging. So, some of it. The

answer is clearly some of it, a good part of it is coming from tariffs. But we'll be, we'll be

working, and so will other forecasters to try and find the best possible way to separate non-tariff

inflation from tariff inflation. In terms of the, your sort of looking through question, too soon to

say about that. As I've mentioned, it can be the case that it's appropriate sometimes to look

through inflation if it's going to go away quickly without action by us, if it's transitory. And that

can be the case in the case of tariff inflation. I think that would depend on the tariff inflation

moving through fairly quickly and critically as well on inflation expectations being well-

anchored, longer-term inflation expectations being well-anchored.

HOWARD SCHNEIDER. Well, I guess I'm looking at the obvious here, the fact that the

policy path doesn't change at all and inflation is unchanged in the out years also, doesn't that

imply you all have basically decided that there is no signal here and that it's just going to -- we're

back to transitory again?

CHAIR POWELL. So, I think, I think that's kind of the base case, but as I said, we really

can't know that. We're going to have to see how things actually, actually work out. And the fact

that there wasn't much change, I think that's partly because, you know, you see -- you see weaker

growth but higher inflation, they kind of offset. And also, frankly, a little bit of inertia when it

Page 5 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

comes to changing something in this highly uncertain environment, you know, I think there is a

level of inertia where you just say, maybe I'll stay where I am.

MICHELLE SMITH. Colby.

COLBY SMITH. Thank you, Colby Smith with the New York Times. You just described

inflation expectations as well-anchored, but has your confidence in that assessment changed at

all, given the increase in certain measures and the high degree of uncertainty expressed by

businesses, households, and forecasters?

CHAIR POWELL. So, when inflation expectations, of course, we do monitor inflation

expectations very, very carefully, in basically every source we can find, and you know, short-

term, long-term, households, businesses, forecasters, market based. And I think the picture

broadly is this, you do see increases widely in short-term inflation expectations, and people who

fill out surveys and answer, you know, questionnaires, are pointing to tariffs about that. If you

look -- in the survey world, if you look a little further out, you really, you really don't see much

in the way of an increased longer-term expectation. Inflation expectations are mostly well

anchored. If you look at the New York, for example, then you have market based, and it's the

same pattern, you know, people in markets are pricing in and break-evens, some higher inflation

over the next year, must be related to tariffs. We know from the surveys. But if you look out five

years, or five-year, five year, forward, you'll see that break-evens have, are either flat or actually

slightly down in the case of a longer-term one. So, we look at that, and we will be watching all of

it very, very carefully. We do not take anything for granted, that's at the very heart of our

framework, anchored inflation expectations, but that's what you see right now.

COLBY SMITH. And how much weight do you put on the deterioration in consumer

confidence surveys? You said recently that this is perhaps not the best indication of future

Page 6 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

spending, but I'm curious, you know, what you think is behind this deterioration and to what

extent it could be a leading indicator for hard data?

CHAIR POWELL. So, let's start with the hard data. You know, we do see pretty solid

hard data still. So, growth looks like it's maybe moderating a bit, consumer spending moderating

a bit, but still at a solid pace. Unemployment's 4.1 percent, job creation most recently has been at

a healthy level. Inflation has started to move up now, we think partly in response to tariffs and

there may be a delay in further progress over the course of this year. So, that's the hard data.

Overall, it's a solid picture. The survey data, of both household and businesses, show significant

rise in uncertainty and significant concerns about downside risks. So how do we think about

that? And that's the, that is the question, as I mentioned the other day, as you pointed out, the

relationship between survey data and actual economic activity hasn't been very tight, there have

been plenty of times where people are saying very downbeat things about the economy and then

going out and buying a new car. But we don't know that that will be the case here. We will be

watching very carefully for signs of weakness in the real data. Of course we will. But I, you

know, given where we are, we think our policy is in a good place to react to what comes, and we

think that the right thing to do is to wait here for, you know, for greater clarity about what the

economy is doing.

MICHELLE SMITH. Nick.

NICK TIMIRAOS. Nick Timiraos, The Wall Street Journal. Chair Powell, Chair

Greenspan once defined price stability as an environment in which inflation is so low and stable

over time that it doesn't materially enter into the decisions of households and firms. Can you say

that today that we have that price stability? That households and businesses are lowering in price

Page 7 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

or do you see, by an advanced psychology, big changes in inventories and surveys that show

consumers, at least in the short run, expect higher inflation?

CHAIR POWELL. So, I do like that definition a lot, in fact, I used it at the recent

conference where I spoke. So, I think a world where people can make their daily economic

decisions and businesses and they're not having to think about the possibility of significantly

high inflation. We know inflation will bounce around, that's, that is price stability. You know, I

think we were getting closer and closer to that. I wouldn't say we were at that. Inflation was

running around 2 and 1/2 percent for some time. I do think with the arrival of the tariff inflation,

further progress may be delayed if the SEP doesn't really show further downward progress on

inflation this year. And that's really due to the tariffs coming in. So, delayed, but if you look at

our forecast, we do see ourselves getting back into the low twos in '26, and then down to two by

'27, of course highly uncertain. So, I see progress having been made toward that, and then

progress in the future, I think that progress is probably delayed for the time being.

NICK TIMIRAOS. If that's the case, why are there cuts in the SEP for 2025?

CHAIR POWELL. So, again, people wrote down two cuts the last time, and they look at,

they look at the, you know, the -- and they wrote down, you know, meaningful decline in growth

from 2.1 to 1.7 in 2025, a tick up in then unemployment rate, so not much there. But core

inflation up by 3/10. And so those two kind of -- those kind of balance each other out. So people,

not everybody, but on balance people wrote down similar numbers. The changes aren't that big.

The other factor though, as I mentioned, is just really high uncertainty. What would you write

down? I mean, it's just, it's really hard to know how this is going to work out and again, we think

our policy is in a good place, we think it's a good place where we can move in the direction

Page 8 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

where we need to. But in the meantime, it's really appropriate to wait for further clarity and of

course, you know, the cost of doing that, given that the economy is still solid, are very low.

MICHELLE SMITH. Edward.

EDWARD LAWRENCE. Thank you, Mr. Chairman. Edward Lawrence with Fox

Business. So, with near 4 percent unemployment rate, that should be low enough to bring people

in from the sidelines, in terms of hiring. But we're seeing the hiring rates have been stuck at

2023, 2024 levels. So, what's going on there?

CHAIR POWELL. Yeah, so that's a feature of the -- has been for some time, a feature of

this labor market. You have pretty high participation, accounting for aging, you've got wages that

are consistent with 2 percent inflation, assuming that we're going to keep getting, you know,

relatively high productivity. We've got unemployment, you know, pretty close to its natural level,

but job, the hiring rate is quite low. But so is the layoff rate. So, you look at initial claims or

layoffs, so you're not seeing people losing their jobs, but you're seeing that people who don't

have a job having to wait longer and longer. And you know, the question is which way does that

break? If we were to see a meaningful increase in layoffs, then that would probably translate

fairly quickly into unemployment because people are, you know, it's not a -- it's not a big hiring

market. We've been watching that, and it's just not in the data, it hasn't happened. What we've

had is a low firing, low hiring situation, and it seems to be in balance now, for you know, for the

last six, seven, eight months. That's where we are, there's healthy levels of job creation too. So

overall it's a labor market that's in balance and, you know, we watch it very carefully.

EDWARD LAWRENCE. So then, have we seen the administration, the new

administration's policies in the economic numbers yet? And when do you anticipate that

happening?

Page 9 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

CHAIR POWELL. In labor? Or in other –

EDWARD LAWRENCE. In labor and inflation, just across the economy. Have we

started to see the new policies take effect in the numbers?

CHAIR POWELL. I, you know, only in a kind of an early way. I mean it's only been a

few months, right? You know, for example, the layoffs that are happening here are, you know,

they're certainly meaningful to the people involved and maybe meaningful to a particular

neighborhood or region, or area, but at the national level, they're not. They're not significant yet,

but we don't know, we don't know where that, how far that will go. We'll find out much more. I

mentioned that you saw it, we've had two -- two very strong goods inflation readings in the last

two months, which is very unexpected. And I think hard to trace it to specific tariffs, but it must

have, it must have something to do with -- it's either noise and it'll come back, and that's very

possible too, but if it is persistent, then it must be to do with, you know, people buying ahead of

tariffs, or raising prices ahead of tariffs, and things like that. That, those kinds of things happen

and they're very, very hard to capture because so much of it is indirect. A great example is

washing machines were tariffed in the last round of tariffs, and prices went up, but prices also

went up on dryers, which were not tariffed. So, the manufacturers just, you know, they just kind

of followed the crowd and raised it. So, things happen very indirectly, and so there'll be a lot of

work done in the coming months to try to trace all that through. But ultimately though, it's too

soon to be seeing significant effects in economic data.

MICHELLE SMITH. Craig.

CRAIG TORRES. Craig Torres from Bloomberg News. Thanks, Chair Powell. You said

transitory price increases from tariffs are the base case, transitory is the base case. Wasn't it the

base case last time? And didn't the FOMC forecast lower inflation ahead last time? And wasn't

Page 10 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

the lesson that it quickly got into services, haircuts, daycare, everything else? And so I'm just

wondering why the nine aren't taking that on board and are cutting twice this year.

CHAIR POWELL. When you say last time, are you talking about the last -- Pandemic,

yes. You could have been talking about the last time there were tariffs. Okay. In which case the

inflation was transitory. Yeah, no, of course we're well-aware of that and you know, it's still the

truth, if there's an inflationary impulse that's going to go away on its own, it's not the right policy

to tighten policy because by the time you have your affect, your affect by design, you are

lowering economic activity and employment, and if that's not necessary, you don't want to do it.

In real-time, as we know, it's hard to make that judgment. So, and we're well-aware of what

happened obviously with the Pandemic inflation. But I mean, we have to look at this as a

different situation, there are differences and similarities. I mean it's a different time, you know,

we haven't had real price stability fully reestablished yet, and we have to keep that in mind. And

you know, we also have, we hear that people are very reluctant to take on, you know, to allow

prices to go up, at the same time we hear that businesses are intending to pass many of these

prices through. So it's hard to say how this is going to work out.

MICHELLE SMITH. Steve.

STEVE LIESMAN. Steve Liesman, CNBC. Thanks for taking my question, Mr.

Chairman. The Bank of Canada in its last policy statement said, the monetary policy cannot

offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead

to ongoing inflation. I wonder if that kind of reflects your own sense of prioritization faced with

higher process and weaker growth at the idea is you have to take care of inflation.

CHAIR POWELL. You know, so we have two goals right, we have maximum

employment and price stability. And we have to balance those. And you know, there can be

Page 11 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

situations in which they are in tension, right? And we have, actually have a provision in our, in

our consensus statement that says what we should do in that case. That's a very challenging, you

know, situation for any central bank, and certainly for us. And so what we say that we'll do is

we'll look how far each of those two goals is -- each of those two measures is from its goal, and

then we'll ask how long we think it might take to get back to the goal for each of them, and we'll

make a judgment because our, you know, our tools work in one direction. We're either tightening

or loosening. So it's a very challenging situation. Let me say, we don't have that situation right

now. That's not what the, that's not where the economy is at all. It's also not where the forecast is.

I don't know any mainstream forecast that really shows significant problems like that. So.

STEVE LIESMAN. Well, just to follow-up, yesterday the UCLA Anderson Forecast said

there's a high probability of a recession. Where do you stand on whether or not to slow down

you're seeing creates a higher probability or concern that you may have on recession? Thank you.

CHAIR POWELL. You know, there's always an unconditional probability, possibility of

a recession. It might be broadly in the range of one in four at any time. If you look back through

the years, it could be within 12 months of one in four chance of a recession. So the question is, is

whether that -- whether this current situation, those possibilities are elevated. I will say this, we

don't make such a forecast. If you look at outside forecasts, forecasters have -- have generally

raised, a number of them have raised their possibility of a recession somewhat, but still at

relatively moderate levels. You know, still in the region of the traditional, because they were

extremely low, if you go back two months, people were saying that the likelihood of a recession

was extremely low. So, has moved up but it's not high.

MICHELLE SMITH. Chris.

Page 12 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

CHRIS RUGABER. Hi, thank you. Chris Rugaber at Associated Press. As you know, I

guess last night the President Trump fired two members of the Federal Trade Commission, an

independent agency, and this could cause the kind of legal fight about the Administration's power

to fire independent people. If those firings stand, is that a threat to the Fed's independence?

Could he do the same thing to the Fed Board?

CHAIR POWELL. So, I think I did answer that question in this very room some time

ago, and I have no desire to change that answer, and have nothing new for you on that today.

CHRIS RUGABER. Well I just, okay, well. Maybe I'll have another Mulligan. As you

know, I want to go back to the consumer sentiment as particularly the inflation expectations in

the University of Michigan Survey. In the summer of 2022, you cited the rise in the long-term

inflation expectations in that index as the reason that you went big with a three-quarter point

hike. So I know you, I mean you've talked about all the different measures now, but you seem to

not be placing the same weight on that, and so I'm just wondering, are you dismissing that, what

we saw last week from the University of Michigan, or does that carry the same weight as it did in

the past?

CHAIR POWELL. So, I mentioned it back then, but in no way did I place a huge weight

on it. I think it, that was an ex-post story, but that wasn't the case. That was a preliminary reading

and so is this. And it's also, this is, that Michigan, the one you're referring to, the longer-term

thing, you know, we look at it and we don't dismiss data that we don't like, we force ourselves to

look at it. But it is an outlier compared to market-based and compared to other survey-based

assessments of longer run inflation expectations. So we've got to keep that in mind, and again, I

would just say, we look at all of them. And that one's kind of an outlier, but you know,

nonetheless we take notice of it.

Page 13 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

CHRIS RUGABER. Thank you.

MICHELLE SMITH. Michael.

MICHAEL MCKEE. Michael McKee from Bloomberg Radio and Television. There is a

worry on Wall Street that when you say you want to study the net effect of the fiscal policies we

may see on the economy that you would end up waiting too long and be behind the curve in

responding to any downturn. How can you reassure people that you can spot a problem early

enough, unless you decide to be preemptive?

CHAIR POWELL. Yeah, look, we're aware of it, we're well-aware of how things are

going to evolve in the time frames and all that, and you know, we will use our tools to foster

achievement of our goals to the best we can. And of course we're going to try to be timely with

that. For right now, the hard data are pretty solid, we are obviously aware of the soft sentiment

data and the high uncertainty and we're watching that carefully. And we think it's a good time for

us to wait for further clarity before we consider adjusting our policy stance.

MICHAEL MCKEE. Do you think it's going to be hard to get clarity in a government by

tweak, I mean do you have a feeling that at some point you actually will have a forecast you can

trust?

CHAIR POWELL. Yes, I think we will. I just, it's hard to say when that will be. You

know, we're -- these decisions are going to be made, and they're going to be implemented and

then we'll know. At that point we'll know what the decisions are and we'll have to make

assessments then about the implications for the economy. Those things will happen, a lot of them

will happen over the course of, you know, in coming months, certainly over the course of this

year, and we'll be adapting as we go.

MICHELLE SMITH. Rachel.

Page 14 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

RACHEL SIEGEL. Hi, Chair Powell. Rachel Siegel from The Washington Post. Thank

you for taking our questions. At the beginning you were talking about separating the signal from

the noise, and tariff inflation from non-tariff inflation, can you walk us through what that looked

like over the last couple of months? If there were specifics from the January meeting to now that

helped you make those distinctions.

CHAIR POWELL. So when we say separating the signal from the noise, that's just a

way of saying that things are highly uncertain and that, you know, you're reading about

developments, the news is full of developments, so tariffs being put on and taken off and things

like that. That's, some of that is noise, in the sense that it's not really telling you anything. You're

trying to extract a signal from that, and the signal is what's going to be the effect on economic

activity, on inflation, on employment, and all those things. So, so that's really when we say signal

and noise. Sorry, the second thing was?

RACHEL SIEGEL. Or similarly for tariff inflation, non-tariff inflation, ways that you're

making the decision.

CHAIR POWELL. That's sort of a special case of that, you know, the idea being, and I

do think that the first two months of this year are a great example. You've got high readings for

goods inflation, after a string of readings that average close to zero, and you have to ask, it's

coming during tariffs, but you know, it's very hard to actually scientifically go back and match up

those increases and say yes, I can prove that that's from tariffs. But it kind of has to be to some

extent. Plus, noise, there can be idiosyncratic readings in various categories, which will shortly

reverse, and that happens too. And that could be a big piece of it. You know, I think we'll know in

a couple of months we'll know whether those were, you know, where that really was from. But

it's a, that's another case where I think it's going to be very, very challenging to unpack the

Page 15 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

inflation that we see over the course of this year and be able to say with confidence how much of

that came from inflation and how much of it, sorry, from tariffs, and how much of it didn't. But

that's what we'll be doing, we'll be doing that and so will everybody else and we'll all be trying

very hard to make that assessment and, you know, I'm sure we will make a lot of progress on that

and we already have. But it's going to be a challenge.

RACHEL SIEGEL. Do you have a sense yet as to what, in your mind, what makes

something cross from noise to a signal, what that threshold would look like?

CHAIR POWELL. You know, it would depend on what we're talking about. I mean

obviously you're looking for direct evidence that particular pieces of inflation are, or clearly not,

caused by tariffs. For example, something that was, you know, in the service sector that was far

away from anything that's tariffed. You might think, well that is like frankly housing services

inflation, which by the way, has been behaving well. You know, which for some time was kind of

our problem, now it's been, it's slow, but it's definitely, you know, moving down in a very good

way. It's more now with goods and to some extent with non-housing services inflation.

MICHELLE SMITH. Kelly.

KELLY O’GRADY. Thanks for taking our questions, Chair Powell. Kelly O'Grady, CBS

News. So consumer sentiment has dipped dramatically but you say the economy and the hard

data is still solid. What is your message to consumers that clearly disagree and don't feel that

strength? Because the hard data they're looking at is their grocery bill.

CHAIR POWELL. Okay, so a couple things, the grocery bill is about past inflation,

really. There was inflation in '21, two, and three, and prices went up. The current level, it's not

the change in prices, it's they're unhappy, and they're not wrong to be unhappy, that prices went

up quite a bit and they're paying a lot for those things. So that's, I think that is the fundamental

Page 16 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

fact and has been for a long time, a couple years, why people are unhappy with the economy. It's

not that the economy is not growing, it's not that inflation is really high, it's not that

unemployment is high. It's none of those things. We have, you know, 4.1 percent unemployment,

we've got 2 percent growth, and you know, it's a pretty good economy. But, people are unhappy

because of the price level. And I do, we completely understand and accept that.

KELLY O’GRADY. And just to follow-up, why are you still projecting two rate cuts this

year if your own projections show inflation higher for longer? Does that mean you see a

slowdown in economic growth as a real threat?

CHAIR POWELL. So, I think if you, yeah, I mean, remember we came into this with, at

the December meeting, and the median was two cuts, the median was. And so you come in and

you see, broadly speaking, weaker growth but higher inflation. And they kind of balance each

other out, so you think, and unemployment is really, really only a 1/10 change. So it's, there's just

not a big change in the forecast. There really isn't. Modest, you know, meaningfully higher --

sorry, growth, and meaningfully higher inflation, which call for different responses. Right? So,

they cancel each other out and people just said, okay, I'm going to stay here. But the second

factor is, it's so highly uncertain, is just, you know, we're sitting here thinking, and we obviously

are in touch with businesses and households all over the country. We have an extraordinary

network of contacts that come in through the reserve banks and put it in the Beige Book, and also

through contacts at the Board. And we get all that, and we do understand that sentiment has

fallen off pretty sharply, but economic activity has not yet. And so we're watching carefully, so I

would tell people that the economy seems to be, seems to be healthy. We understand that

sentiment is quite negative at this time, and that probably has to do with, you know, turmoil at

the beginning of an administration. It's making, you know, big changes in areas of policy. And

Page 17 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

that's probably part of it. I do think the underlying unhappiness people have about the economy

though is more, is more about the price level.

MICHELLE SMITH. Victoria.

VICTORIA GUIDA. Hi, Victoria Guida with Politico. I wanted to ask first of all if you

could clarify. You were talking about how tariffs were a good part of the uptick in inflation

forecasts, and I was just wondering what that specifically refers to, is that the tariffs that have

already been put in place? Is that anticipating some of the tariffs that might be coming on April

2? And then also, if you wouldn't mind, talking a little more about the balance sheet decision,

and what drove that. Did that have anything to do with expectations of how the debt ceiling,

raising the debt ceiling might affect the reserve supply?

CHAIR POWELL. Yeah, so, in the SEP you'll see that there's not further progress on core

inflation this year. We're kind of side flat lining, going sideways. We don't ask people to say, to

write down how much of this is from tariffs and how much of it is not. But some of it is from

tariffs. We know that tariffs are coming, and we know that they're probably already, all

forecasters have tariff inflation affecting core PCE inflation, core CPI inflation this year, without

exception. I'm not aware of an exception. So, it's in there, I can't tell you how much of that it is.

In terms of the balance sheet, so yeah, we -- I think, I guess the way I'd say it is, you know, it was

the flows in and out of the TGA that got us thinking about it, but as we, you know, as we thought

about it, we really came to the view that this was a good time to make the move that we made.

And broadly the Committee came around to the view that we would do the same thing we'd

already done, which is once we, I guess in June, we -- was it June? Whenever it was, we lowered

the pace of QT and we're just going to do that again. We're going to cut it roughly in half. And

the sense of that is if you're cutting the pace of QT roughly in half, then the runway is probably

Page 18 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

doubled, okay? So, it's going, it's going to be slower for longer. And people really liked that.

People thought, that's a good idea. You know, it's like a plane, you can think of it like a plane

coming in for a landing, as we get closer and, by the way, we still think the reserves are

abundant, but you begin to see some of the, some of the things we look at begin to react a little

bit. But we still think that they're abundant. Of course now, the TGA is emptying out, so reserves

are higher now. So you can't really see the underlying signal. So we came around to the view and

it had a lot of appeal, and so we did it. It really it has no implications at all for monetary policy, it

has no implications at all for the ultimate size of the balance sheet, it isn't sending a signal in any

hidden way that you can try to tease out. It's just not there. We're basically, it's very consistent

with our plans and our practices that we've published and that we've followed since we began

this, what is a very successful, you know, rundown of the balance sheet. Again, the second time

that we've slowed the pace and we've said that we would stop when we were somewhat above

the level we judge as ample. And clearly we're not at that level yet, but we're going to be

approaching it more slowly. It's a common sense kind of a thing, and it had pretty broad appeal, I

will say.

MICHELLE SMITH. Claire.

CLAIRE JONES. Claire Jones, Financial Times. You said in January, Chair Powell, that

inflation expectations remained well-anchored. Would you still say they remain well-anchored

today, and just to reiterate the question that others have asked if they’re not so well-anchored,

why hasn't there been a more radical shift to the policy path today? Thank you.

CHAIR POWELL. So when we talk about inflation expectations being well-anchored,

we're talking about longer run inflation expectations. And they really haven't moved much, I

mean if at all. There's one reading that everyone's focusing on that's higher, but the other survey

Page 19 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

readings and the market-based readings all show relatively, you know, well-anchored inflation

expectations. You would expect that expectations of inflation over the course of a year would

move around, because conditions change, and in this case we have tariffs coming in. We don't

know how big, what’s -- there's so many things we don't know, but we kind of know there are

going to be tariffs and they tend to bring growth down, they tend to bring inflation up in the first

instance. So, so I would say, you know, I'm not dismissing what we're seeing in short-term

inflation expectations. We, as I mentioned, follow that very carefully. But when we say

expectations are well-anchored, we're really looking at, you know, longer term, five year and out,

and there's really no story to tell five years and out, either in market-based or in surveys. But we

keep -- we'll watch it, I mean we're not, you know, we're not going to miss any evidence that

longer term or medium term inflation expectations are moving.

MICHELLE SMITH. Neil.

NEIL IRWIN. Hi Chair Powell. Neil Irwin with Axios. Treasury Secretary Bessent has

observed that a large share of job growth over the last couple of years has been in what he calls

government, or government adjacent sectors, healthcare, education. Do you agree that there's

some weakness in underlying private job growth and do you see the composition of job growth

as something that has policy implications?

CHAIR POWELL. So that has been the case. We talked about that over the course of the

last year. There were, there were some good number of months and times when a lot of the job

creation was concentrated in, you know, educational institutions, healthcare, state governments,

things like that. There were also times when private sector job growth has been moving in a

healthy -- and they're all jobs, but and remember, we're, you know, we're at very low

unemployment for, you know, for quite a time now. So I think it's a good labor market, but it's,

Page 20 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

look, it's something that we monitor carefully. From our standpoint, employment is employment.

But you know, the elected government is entitled to have, you know, we don't have policies that

address different kinds of employment. But the elected government has a different role and they

can, they can have those.

NEIL IRWIN. Quick QT question. Does the Committee envision at some point tapering

the MBS runoff as well?

CHAIR POWELL. I think tapering it, I don't know, there's no plan to do that. You know,

at a certain point we'll stop runoff, and we may or may not stop MBS runoff though, because you

know, we can -- we can, we want to stop runoff in net at some point. We haven't made any

decisions about that, but you know, we want the MBS to roll off our balance sheet. We really,

strongly desire that. So, but we haven't made any decisions about that. You know, we will, I think

we'd -- we'd look carefully at letting that keep going, but hold the overall size of the balance

sheet in, you know, constant at some point, a point that we're not at yet.

MICHELLE SMITH. Simon.

SIMON RABINOVITCH. Simon Rabinovitch with the Economist. Thank you Chair

Powell. Several times today you said that you feel you're well-positioned to wait for greater

clarity. At the same time, you could point to quite a few growth risks at the moment. We've seen

a stock market that's gone quite wobbly, rapidly cooling housing sales, plunging confidence

surveys. Today, not only did the SEP mark down the growth outlook 17 of 19 see risks to the

downside. So my question is, how confident are you that you're well-positioned? Or is that one

more thing that you're uncertain about?

CHAIR POWELL. I'm confident that we're well-positioned in the sense that we're well-

positioned to move in the direction we'll need to move. I mean I, I don't know anyone who has a

Page 21 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

lot of confidence in their forecast. I mean the point is, we are -- we are at, you know, we're at a

place where we can cut, or we can hold, what is a clearly a restrictive stance, of policy. And that's

what I mean. I mean I think we're -- that's well-positioned. Forecasting right now, it's you know,

forecasting is always very, very hard, and in the current situation, I just think it's uncertainty is

remarkably high.

SIMON RABINOVITCH. And sorry, standing here today, would you be surprised to

pivot back towards rate cuts in May?

CHAIR POWELL. I think we're not going to be in any hurry to move, and as I

mentioned, I think we're well-positioned to wait for further clarity. And not in any hurry.

MICHELLE SMITH. Matt Egan.

MATT EGAN. Matt Egan from CNN. Thank you Chair Powell. The Fed's statement

released today removed the line that previously said, the Committee judges that the risk to

achieving its employment and inflation goals are roughly in balance. Can you explain the

decision to remove that line? Does it mean that you're now more concerned about inflation or

about employment?

CHAIR POWELL. Yeah, actually it does not mean either of those things. You know,

sometimes with language they, it lives its useful life and then we take it off and we, and that was

the case. There's really not meant to be any signal here. Over the past year, you know, conveying

this sense of the balance of risks was important that they be in balance, or close to being in

balance, that was useful as we approach liftoff, if you remember? But we're past that. I'm sorry,

the beginning -- beginning to cut. So, we just took it out. I actually would say that the more

important thing now about risks, and this is in pages like 10, 11, 12 of the SEP, if you look,

participants widely raised their estimate of the risks to our, of uncertainty, but also the risks to

Page 22 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

growth in our employment and inflation mandates. That's a more salient point now than whether

they're, whether they're in balance.

MATT EGAN. Just on the stock market, the stock market has obviously declined

significantly since the Fed last met. Are you concerned at all about some of the market volatility

having a real economic impact in terms of hurting business spending, or consumer spending,

especially among higher income households?

CHAIR POWELL. So, financial conditions matter to us because you know, financial

conditions are the main channel to the real economy through which our policy has its affect. So

they're important. But what matters from a Fed standpoint for the macro economy, is material

changes to overall financial conditions that are persistent. That last for a while. Long enough to

actually affect economic activity. So that's what we're looking for. I'm not going to opine on the

appropriate level of any market equity debt, commodities, or anything like that. And I would just

point you to the bigger picture again, you know, the real economy, the hard data, are still in

reasonably good shape. It's the soft data, it's the surveys, that are showing, you know, significant

concerns, downside risks, and those kind of things. We don't dismiss that, we're watching it

carefully, but you know, we don't want to get ahead of that. You know, we want to focus on the

hard data, if it's -- if that's going to affect the hard data, we should know it very quickly and of

course we'll understand that. But you don't see that yet.

MICHELLE SMITH. Jennifer. Thank you Chair Powell.

JENNIFER SCHONBERGER. Jennifer Schonberger with Yahoo Finance. As you look to

navigate higher inflation and lower growth, the Fed has talked about heeding the lessons from

the 1970s. Is the Fed willing to have a recession if it means breaking the back of inflation?

Page 23 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

CHAIR POWELL. Well, fortunately, we're in a situation where we have seen inflation

move down from, you know, higher levels to pretty close to 2 percent, while the unemployment

rate has remained very consistent with full employment, 4.1 percent. So, we now have inflation

coming in from an exogenous source, but the underlying inflationary picture before that was, you

know, basically 2 and 1/2 percent inflation I would say. And 2 percent growth, and 4 percent

unemployment. So that's what, that's what we did together, the economy accomplished. So, I

don't see any reason to think that we're looking at a replay of the '70s or anything like that. You

know, inflation, underlying inflation is, you know, still running in the twos, with probably a little

bit of a pickup associated with tariffs. So I don't think we're facing, I wouldn't say we're in a

situation that's remotely comparable to that.

JENNIFER SCHONBERGER. And last month the idea of a DOGE dividend was

proposed, which would send $5,000 checks to every taxpayer from DOGE savings. President

Trump and Elon Musk have supported this. There's reports there could be a bill introduced on

Capitol Hill. What impact might that have on household savings and spending, in terms of your

growth and outlook for inflation?

CHAIR POWELL. You know, it's not appropriate for me to speculate on political ideas or

fiscal policy for that matter. So, I'm going to, I'm going to pass on that one. Thank you.

MICHELLE SMITH. Daniel.

DANIEL AVIS. Hi Chair Powell. Daniel Avis from Agence France-Presse. You

mentioned that tariffs are already having at least some impact on inflation. I'm just wondering

how you and your colleagues on the FOMC have been thinking about the possibility of

retaliatory tariffs from other countries, especially with April 2 coming up. Was it something you

considered during this meeting? Thanks.

Page 24 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

CHAIR POWELL. So, since the very beginning, we've had kind of a placeholder, the

staff has a placeholder of range of, really a range of possible outcomes from tariffs, and from

trade policy generally. And they generally assume full retaliation in those. And so that's kind of

baked into the numbers. What happens, it will be complicated and there will be some retaliation

and some not, and all that, but ultimately they're trying to, with the placeholder, give us a broad

sense of what this might look like. When we know, when we actually know the specifics, we'll be

able to have still uncertain, but you know, better informed forecasts. So yes, that's in there.

MICHELLE SMITH. Last question goes to Jean.

JEAN YUNG. Hi Chair Powell. Jean Yung with MNI Market News. Had a couple

questions on the balance sheet change that you made. So the minutes had initially described your

discussion on slowing QT as temporary, until the debt ceiling is resolved, but from what you said

earlier, doesn't sound like there's a desire to kind of regain the pace of QT that we have at the

moment after the debt ceiling is resolved. Is that the case?

CHAIR POWELL. Yeah, so we looked at pausing and we looked at slowing, and really

people came together very strongly behind slowing, not pausing, for a variety of reasons. And so

people really came to be, you know, pretty strongly in favor of this move. Slows down the path

and probably lengthens it, you know, doubles it effectively by slowing it by half. That people

thought that's a good place to be. It'll, you know, help us assure that this path is a smooth one as

we get closer and closer to that. So, that's how that came about.

JEAN YUNG. Well, I guess my question is more, was that meant to be a temporary

measure during the debt ceiling episode, or?

CHAIR POWELL. You know, it was -- it was actually the TGA flows, Treasury General

Account flows that got us thinking about this, but the more we thought about it, we came around

Page 25 of 26
March 19, 2025 Chair Powell’s Press Conference PRELIMINARY

to this. And you know, it is, yes it was provoked, the original discussion was provoked by that.

But I think what we came up with though, was broader than that and different and it does address

that issue but it really is also, it fits in really nicely with our principles and our plans, and the

things we've done before, and the things we said we would do. So, that's why I think, you know,

pretty strong support. I'd just say it's nothing to do with monetary policy, nothing to do with the

size of the balance sheet, it's just kind of a common sense adjustment as you get closer and

closer. Let's slow down a little bit again and that way we'll be more and more confident that

we're getting where we need to get. We can take our time getting there, you know, we're

shrinking the balance sheet every month, and we think that's -- we think it was a good play, as I

mentioned, well supported. Thanks very much.

Page 26 of 26