U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., the United States, on Dec. 13, 2023. [Photo/Xinhua]
The U.S.
"Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter," the Federal Open Market Committee (FOMC) said in a statement after concluding a two-day policy meeting, the last in 2023.
"Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated," the committee said.
On inflation, the central bank is "making real progress," but "we still have a ways to go," Fed Chair Jerome Powell said at a press conference Wednesday afternoon.
"If you look at 12-month measures, you're still well above 2 percent -- you're actually above 3 percent on core through November PCE," Powell said, referring to the Personal Consumption Expenditures price index, the Fed's preferred gauge for inflation.
"No one is declaring victory. That would be premature. And we can't be guaranteed of this progress," Powell said. "So, we're moving carefully in making that assessment of whether we need to do more or not."
Over the past three months, payroll job gains averaged 204,000 jobs per month, "a strong pace that is nevertheless below that seen earlier in the year," Powell said, noting that the unemployment rate remained low at 3.7 percent.
The median unemployment rate projection in the Fed's newly released quarterly summary of economic projections (SEP) would rise somewhat from 3.8 percent at the end of this year to 4.1 percent at the end of next year.
In its statement, the central bank noted that tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation, adding that the extent of these effects remains uncertain.
According to the Fed's latest economic projections, FOMC participants revised up their assessments of GDP growth this year to 2.6 percent but expect growth to cool, with the median projection falling to 1.4 percent next year.
"I think you can say that there's little basis for thinking that the economy is in a recession now," Powell said.
"I think there's always a probability that there will be a recession in the next year, and it's a meaningful probability," he continued. "There are certainly risks. It's certainly possible that the economy will behave in an unexpected way."
The latest action marked the third straight meeting where the Fed remained on hold, and many view that the Fed is done with its tightening cycle, which began in March 2022 amid surging inflation.
"In determining the extent of any additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments," the statement said.
When asked the addition of the word "any" before "additional firming" in the latest statement, Powell told reporters that the committee added "any" as an acknowledgment that "we are likely at or near the peak rate for this cycle."
"But participants also didn't want to take the possibility of further hikes off the table," he added.
According to the newly released summary of economic projections, 17 out of the 19 Fed officials project that policy rate will be lower by the end of 2024 than its current level, with most of them expecting rates to fall 50 basis points or 75 basis points.
