Fed Still ‘Quite Worried’ About High Inflation

Full Video Transcript Below:

JEROME POWELL: My FOMC colleagues and I are strongly committed to restoring price stability. After our November meeting, we noted that we anticipated that ongoing rate increases will be appropriate in order to attain a policy stance that is sufficiently restrictive to move inflation down to 2% over time. The time for moderating the pace of rate increases may come as soon as the December meeting. Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level. It is likely that restoring price stability will require holding policy at a restrictive level for some time.

MARTIN BACCARDAX: So essentially, after the Fed raised its interest rates by 75 basis points in early November, the agreed statement says, okay we're probably going to have smaller increases in the future as we monitor their impact on the economy. And, if we keep hiking rates at these jumbo levels, they could have some dislocation effects into financial markets. So we're going to cool it. Now, Powell went into the press conference 30 minutes later and said, listen, we're not talking about a pivot. It's too early to consider a pause. Inflation is still way too high, and I'm still quite worried.

So that hawkish tone really sort of blunted the impact of the Fed's statement on the 2nd of November. So what it seemed to me, J.D., was that yesterday he came back to the pack. He essentially repeated what the statement had said and what we found from the minutes, which was, as discussed, likely smaller rates, monitor their impact, avoid financial market dislocation. So I think the fact that he articulated that ,and you guys pulled the money quote was why we had such a bump up in stocks yesterday.