The following summary represents direct quotes (with minor immaterial changes to make reading easier) from the press conference.

A. Backdrop – Prepared Remarks

• Monetary policy actions are guided by the dual mandate to promote maximum employment and stable prices for the American people. We see the risks to achieving our employment and inflation goals as being roughly in balance, and we are attentive to the risks on both sides of our mandate.
• 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.
• 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 market are broadly in balance. The labor market is not a source of significant inflationary pressures.
• Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2 percent longer-run goal. 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.
• 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.
• 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.
• 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.

B. Q&A

• Challenge & Rates
  • The Fed has two goals: maximum employment and price stability with inflation target at 2%.  At anyone point the Fed looks at how far each of those two measures is from its goal, and then ask how long it might take to get back to the goal for each of them, and a judgment is made.  Because monetary tools work in one direction. The action is either tightening or loosening. The situation is challenging.
  • Separating the signal from the noise, that’s just a way of saying that things are highly uncertain.  Noise is not really telling us anything. We are trying to extract a signal from that, and the signal is what’s going to be the effect on economic activity, on inflation, and on employment,
  • Forecasting right now is always very, very hard, and in the current situation the uncertainty is remarkably high.  The Fed is not in any hurry to move, and the Fed believes it is well-positioned to wait for further clarity. And not in any hurry.
• Tariffs & Inflation
  • The long-term inflation expectation remains well-anchored.  It is very difficult to have a precise assessment of how much of inflation is coming from tariffs and from other. Goods inflation moved up pretty significantly in the first two months of the year. A good part of it is coming from tariffs. But we’ll be working to try and find the best possible way to separate non-tariff inflation from tariff inflation. If inflation is transitory, it can be the case that it’s appropriate sometimes to look through inflation if it’s going to go away quickly without action. Tariffs tend to bring growth down, and bring inflation up in the first instance.
  • Longer-term inflation expectations being well-anchored. Short-term inflation expectations have increased widely, and people who fill out surveys and answer are pointing to tariffs. Hard Data is pretty good: growth and consumer spending remain solid; and employment is at healthy level. Inflation has moved up. Survey Data on the other hand shows significant rise in uncertainty and concerns about downside risks. Thus the relationship between survey data and actual economic activity hasn’t been very tight.  The right thing to do is to wait here for greater clarity about what the economy is doing.
• Labor Economy
  • If there is a meaningful increase in layoffs, then that would probably translate fairly quickly into unemployment because it’s not a big hiring market. Currently, it is a low firing, low hiring situation, and it seems to be in balance now and as so for the last six, seven, eight months. That is a healthy levels of job creation too. So overall it’s a labor market that’s in balance.  It is still too early to see the impact from the New Administration policy at this time.
• Recession
  • Through the years, and broadly speaking, it could be within 12 months of one in four chance of a recession.  The Fed does not make such a forecast.  A number of outside forecasts recently have generally raised their possibility of a recession somewhat, but still at relatively moderate levels.
• Quantitative Tightening
  • The Treasury General Account* (TGA) is emptying out, so reserves are higher now.
  • The decision to slow the pace of QT is very consistent with existing plans and practices that are published and followed since QT began. This has been a very successful rundown of the balance sheet.  This is the second time that the Fed has slowed the pace and will stop when the Fed believe the level is somewhat above the level judged to be as “ample.” And clearly it is not at the right level yet, the Fed is going to be approaching it more slowly. Further although no decisions regarding any changes to the MBS runoff pace, but it is the Fed’s strong desire to completely roll off its balance sheet.

*This is the U.S. government’s operating account that is maintained by designated depositaries, primarily Federal Reserve Banks and their branches, to handle daily public money transactions.

https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20250319.pdf