On June 17, the Fed announced it would maintain its target range for the benchmark interest rate 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 post-meeting press conference, Wash stated, "Today's statement has become more concise and straightforward." He emphasized that the focus was 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 revealed plans to establish five task forces to review various aspects of central bank operations, including policy communication, asset management, economic indicator utilization, productivity and labor market dynamics, and inflation policy management. These task forces will include external experts, with the aim of reaching most conclusions by the end of the year.
He particularly stressed the need to reduce reliance on existing economic indicators and to utilize more real-time information. He pointed out that much of the data used by the central bank and government is based on outdated survey methods that do not adequately reflect the current structure of the U.S. economy.
"What the Fed needs to focus on is 'what is happening right now,'" Wash said, mentioning the potential for using private sector information and artificial intelligence (AI) analysis.
The dot plot, which has garnered significant market attention, is also under review. Wash likened the members' interest rate forecasts to a "pencil with an eraser," stating that they represent a range of scenarios rather than strong predictions.
He noted that he did not submit a rate forecast during this meeting and plans to review the entire communication framework, including the dot plot, by the end of the year. However, he ruled out revisiting the 2% inflation target, stating, "There is no reason to reconsider this until we reestablish our promise and ability to achieve the 2% inflation target."
Regarding the current interest rate level, Wash assessed that the impact of high rates is uneven across sectors. While some areas, such as the housing market, are feeling the effects of rate increases, it is difficult to conclude that the economy as a whole is sufficiently tight, especially given 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 committee members.
This FOMC meeting highlighted the potential changes in policy communication rather than the interest rate decision itself. Wash stated, "While we maintain our inflation stability goal, we will reassess the effectiveness of existing communication tools, including forward guidance and the dot plot."
* This article has been translated by AI.
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