"The current decision does not mean the pace of the cycle of interest rate reductions in the United States," American Central Bank President Jerome Powell said at a conference after the meeting on Wednesday, adding that the Fed is not lagging behind in reducing interest rates.
"No one should see our decision as a new rate of tapering. You have to think about it in terms of the base case. What happens, happens. In the base case, you have to look at the projections of where tapering is going. That means we will adjust monetary policy to a more neutral level over time and move at a pace that we believe is appropriate based on economic developments and our base case for moving faster or slower," the FOMC chairman said.
According to Jerome Powell, the Federal Reserve Bank of America is not far behind in reducing interest rates.
"I would say we don't think we're lagging behind." We think we made the decision at the right time, but I think this step can be seen as a sign of our commitment to keep up. That's why this is a big change," he said.
"There's no sign that the FOMC is going to rush. We're off to a good, strong start, and frankly, that's a sign of our confidence. The confidence that inflation is coming down sustainably toward 2 percent. That gives us an opportunity to get off to a good, strong start. And I'm very happy that it we did. The logic was clear to me from an economic and risk management perspective. But I think we'll be careful in making decisions meeting after meeting," the Fed president added.
"This recalibration of monetary policy will help maintain strength and the labor market, and allow for further progress in inflation as we begin to move toward a more neutral monetary policy stance." We will not follow any set course. We will continue to make our decisions at every meeting. We know that loosening the constraints of monetary policy can slow the progress of inflation. At the same time, easing these restrictions too slowly could unnecessarily weaken employment," the FOMC chairman noted.
"Our patient approach to monetary policy over the past year has paid off. Inflation is now closer to our target and we are more confident that inflation is moving sustainably towards 2 percent," he added.
Jerome Powell emphasized that the Fed is not declaring victory in the fight against inflation.
"We're close, but we're not at 2 percent inflation yet. I think we'll want to see 2 percent or close to it for a while, but we're certainly not going to say mission accomplished or anything like that. We're encouraged by the progress we've made," said the Fed chairman.
"Our economy is generally strong and has made significant progress over the past two years in achieving our goals." The labor market has cooled from its previously overheated state. We are committed to keeping our economy strong by supporting maximum employment and returning inflation to the two percent target. We don't see an increasing number of layoffs and we don't hear about it from companies. It can only happen. Therefore, we are not waiting for it. We believe that the time to support the labor market is when it is strong, not when it starts laying off workers," he summarized.