On June 17, the Fed announced it would maintain its target interest rate range at 3.50% to 3.75%. This decision was unanimous. The statement noted that while the U.S. economy is expanding steadily and job growth continues, inflation remains above the target rate of 2%.
In a press conference following the meeting, Wash remarked that the statement has become more concise and straightforward. He emphasized that the focus is on conveying the current economic situation as it is, leading to the decision to exclude forward guidance, which he deemed unsuitable for the current policy environment.
Wash also announced the formation of five task forces to review the central bank's operations. Areas of focus will include policy communication, asset management, economic indicator utilization, productivity and labor market dynamics, and inflation policy. External experts will participate in these task forces, which aim to reach most conclusions by the end of the year.
He stressed the need to reduce reliance on existing economic indicators and to utilize more real-time information, citing that much of the data currently referenced by the central bank and government is based on outdated survey methods that do not adequately reflect the current U.S. economic structure.
Wash pointed out that the Fed needs to focus on "what is happening right now," mentioning the potential for using private sector information and artificial intelligence analysis technologies.
The dot plot, which has garnered significant market interest, is also under review. Wash likened the committee's interest rate forecasts to a "pencil with an eraser," stating that they represent likely paths among various scenarios rather than strong predictions.
He noted that he did not submit a rate forecast during this meeting and plans to reassess the communication framework, including the dot plot, by the end of the year. However, he ruled out any reconsideration of the 2% inflation target, stating, "There is no reason to reconsider it until we reaffirm our commitment and ability to achieve the 2% inflation target."
Regarding the current interest rate level, he assessed that the impact of high rates is uneven across sectors. While some areas, such as the housing market, are experiencing the effects of rate increases, it is difficult to conclude that the economy as a whole is sufficiently tight, especially considering that financial markets remain near all-time highs. He reported that the labor market is generally stable and moving in a positive direction, according to the committee's assessment.
This FOMC meeting highlighted the potential changes in policy communication methods rather than the rate decision itself. Wash stated that while the goal of price stability remains, he will reevaluate the effectiveness of existing communication tools, including forward guidance and the dot plot.
* This article has been translated by AI.
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