Chairman Kevin Wash's first FOMC opening remarks

[Chairman Kevin Wash's first FOMC opening remarks]

Good day. It is an honor, and a true honor, to assume this responsibility at this critical time. I was especially encouraged by the warm hospitality of all my old friends and new colleagues. I have also listened carefully to my FOMC colleagues and have come across many new ideas, new thinking, and genuine interest in moving the Fed forward.

This week's FOMC meeting highlighted the Fed's finest tradition: intense debate, openness, commitment to its mission, accountability, and accountability for its performance.

It all boils down to one: setting monetary policy correctly, or bringing it as close as possible. This is our North Star. My colleagues and I are here to fulfill the responsibilities that Congress has given us. As you've heard before, it's price stability and maximum employment. And these goals have led to our discussion at the meeting that we just finished.

As you just saw, the Commission has decided to keep the target range of the Federal Funds Rate at between 3.5% and 3.75% to support the Fed's dual responsibilities. The Commission also reaffirmed its policy of maintaining sufficient reserves within the banking system.

Economic activity is expanding at a robust pace despite high uncertainty stemming from some of the Middle East conflicts. Both productivity gains and capital investment are strong. Employment growth has been keeping pace with labor growth, and unemployment has remained little changed.

We recognize that inflation is persisting well above the Fed's long-held 2% target.

That has been going on for more than five years. Consistently high prices are a burden on the American people. However, the recent past does not necessarily have to be a harbinger of the future.

I am happy to say that the FOMC members are clear and unanimous. This committee will achieve price stability.

Leadership change for any organization is a natural and timely opportunity to reaffirm its mission, to examine current practices, and to examine whether they are in line with our goals.

We will work closely together to examine what changes will be needed to improve monetary policy implementation.

In that sense, you may have already noticed one thing. That's the difference in today's policy statement. It's a little shorter, a little simpler, and it's taken away some of the old expressions.

The statement delivers only the best facts we can judge. It also leaves out the so-called forward guidance. We agreed that it doesn't fit well with the current policy phase.

This afternoon, you will have also received the usual economic outlook summary, SEP. Until now, it has been customary for participants to submit these forecasts in this committee.

I have encouraged my colleagues to do so, but I myself have not given my personal outlook, at least in accordance with my long-held view of SEP in the current structure.

In the median forecast, real GDP is up 2.2% this year and 2.3% next year. And overall PCE inflation is expected to be 3.6% this year and 2.3% next year. Unemployment is around 4.3%. Participants' median judgment suggests a proper federal funds rate of 3.8% at the end of this year and 3.6% at the end of next year.

Now, let me tell you a few of the key initiatives that I'm announcing today, and I'm going to appoint a task force to each of the five areas that are key to the broader implementation of monetary policy.

First, communication from the Fed.

Second, the Fed's balance sheet.

Third, utilization and dependence of existing data sources.

Fourth, productivity and employment in the age of transition.

Finally, the Fed's inflation framework.

These topics are timely, significant, and worthy of fresh review.

My colleagues and I have been discussing these topics in a lively, purposeful way over the last few days. I am engaging each of these independent task forces with top-notch talents, both in and out of economics, who will be supported by some of the best Fed employees in the field.

And the mission given to them is clear: starting from basic principles, asking difficult questions, reviewing current practices, considering alternatives, and ultimately proposing the next steps for policymakers to consider.

Since last summer, my colleagues have been discussing ways to improve the format and functionality of Fed communications. This new task force will take over and develop that effort.

And I expect this task force to propose a well-thought-out change, including SEP.

The second task force, the balance sheet policy task force, will examine the benefits and risks of the current sufficient reserve system and the composition of the balance sheet.

They will evaluate alternative frameworks for the implementation and operation of monetary policy.

The third task force, the Data Task Force, will assess new sources of information and examine methodological changes to improve data collection. The aim is to provide policymakers with more accurate, relevant, simultaneous and, perhaps most importantly, actionable information about the state of our economy.

Fourth, the Productivity and Jobs Task Force will examine the speed, spread and economic impact of new general-purpose technologies, including AI, and look at implications for the Fed as it fulfills its employment and inflationary responsibilities.

The final task force, the Inflation Framework Task Force, will examine the drivers of inflation from basic principles and weigh the full range of ideas to achieve price stability in a changing economy.

Over the next few weeks, we will hear a lot more about these task forces and this initiative. I think one simple word will be enough for now.

Each task force will contribute to a goal shared by everyone at that table that I've been sitting with for the last few days. It will clarify its mission