The Fed Just Admitted Inflation Won’t Be Under Control Until 2029

The Federal Reserve is now saying that they don't expect to get inflation under control until the year 2029. So that's right, you heard that correctly. In today's video, I want to show you the highlights of the Federal Reserve's press conference, so I'm taking you straight to the source. But before we get into the video clips, I want to show you their official statements. And the first thing is that the Fed members decided unanimously to raise interest rates. And that means that I did lose my wager, so I lost $1,000. Sad, but I'll manage. The interest rate now stands at 4.0%. And the Federal Reserve proceeds to say that inflation remains elevated, and they're committed to delivering price stability. And in this section, the Federal Reserve says that they're going to continue printing money, if appropriate. But you should know that they've been printing money since December of last year, so I guess they see it as appropriate. But they're going to continue, and it's written right there, which is of course counterproductive to fighting inflation, but you're not supposed to know that. And the Federal Reserve updated their forecast. It's called their SCP, their Summary of Economic Projections. And right here, this is the most important part of the SCP. So I've highlighted the year 2026, which means this is how they see things on December 31st of 2026. Okay, so I highlighted the Federal Fund's rates, and back in June, they projected that they're going to raise interest rates only once this year. Now they're forecasting two interest rate increases in 2026, which means one more. However, I just want you to know this is just a forecast. Of course, it's not set in stone. But there's two meetings left, one in October and one December. And if you look at the 2029 column, this is where it says the Federal Reserve expects to get inflation under control to their target in the year 2029. Now, in this first video clip that I want to show you, the reporter is basically calling out the situation. They're saying that it's been five years, like it's been quite some time, and inflation still is not under control. And I want to show you how Warsh responds. Please take a look. Michael McKee from Bloomberg Radio and Television. You said in Jackson Hole that you want to see inflation come down clearly and at sufficient speed, which is a standard without necessarily a measurable threshold. And the reason I ask is because today you say today's policy action will support a timelier return to the committee's 2% target. And yet, in the summary of economic projections, the median pushes the 2% target achievement out to 2029, another two years. And I'm wondering how you can square those two things. One easy way to square that, Mike, is those aren't my forecasts. Those are the forecasts of my 18 colleagues, and I tried to represent them dutifully to you. My business is to not give forward guidance, but my commitment in June was to reaffirm to the American people, to anyone listening, that we will deliver price stability. My commitment in July was to say we want to buy a little bit of time. We want to evaluate what's happening across a range of dimensions. And what I said in Jackson Hole in August is we're committed to a discipline, not to a decision. Today's action starts to show we're serious about this, and we will deliver on the price stability objective. And as the statement said, we'll do it on a timelier basis. That's our decision. And when we continue our discussions over the course of the next several weeks and months, we'll have more to say about it. But I'm ill-prepared to prejudge those future actions. Now, in this next video clip that I want to show you, the reporter says that typically, when the Federal Reserve raises interest rates, it's a sequence, like there's more than one. So the question is basically, should we expect another interest rate increase pretty soon? And I want to show you how Warsh responds. Thank you, Colby Smith from the New York Times. When the Fed starts raising rates, it generally follows with a sequence of hikes. Is there anything different in today's assessment of the economic conditions that would suggest that the typical pattern does not apply? And I guess second to that, what impact do you expect higher rates to have at this juncture if the bulk of what is keeping inflation elevated is stemming from supply shocks? So we're trying to get to more people. So I get to cherry pick my preferred question from you, Colby. This won't surprise you. I'm not in the forward guidance business. The decision we made today was a sober decision, serious decision, responsible decision, one that we have been preparing for and thinking about in my 110 or 20 days here. You heard from other people in the dots, effectively, what their forecasts are. I'm not going to prejudge any future decisions we make. You might have heard me say in Jackson Hole, I committed to a discipline, a set of principles. I committed to look outside the window and see what I can observe. That's what I did in Jackson. That's what we did today. Now, in this video clip, the reporter is asking about the Federal Reserve being data dependence. And you're going to see Warsh say that the Federal Reserve is not looking for a single data point. Rather, they're focusing on the trends. So please take a look. I wanted to ask, you've talked about how you don't like data dependence, including today. But heading into this meeting, there was a ton of focus on the August CPI. And I'm wondering if you think that that was appropriate on the part of markets, or if you've learned anything about you might approach communications going forward? So market participants and reporters, I think generally over the course of the last decade or so, have grown accustomed to waiting somewhat breathlessly on a data point. That isn't my view. I was not waiting breathlessly on what any particular data was, whether it was retail sales this morning or a CPI print last week. I'll just reiterate, trends matter. Data points are noisy. Data point dependence is a dangerous preoccupation. It's not something that concerns me. Markets over time will come to understand how this Fed makes its decisions, what's relevant and not. And I wouldn't want to editorialize that for them beyond it. Okay, so the Federal Reserve raised interest rates. And the reporter asks how this is going to affect the American people. And you're going to see Warsh saying that Americans that are basically the worst off Americans are going to benefit the most by the Federal Reserve bringing down inflation. Please take a look. Big picture. I wonder if you could tell us just what will this move today actually do for American consumers? And I have to ask, what is your message here to President Trump, who has repeatedly called to cut interest rates, not raise them? I've got nothing for you on a discussion with the president. But I won't make that count as your question. On the American people, as I said in my prepared remarks, the least well off are the ones who have the most to gain from stable prices. The decision we made today was the right decision to deliver on the remit that Congress gave us to ensure stable prices. Moreover, I would say, because of the underlying strength of the economy, because we are, as I mentioned, largely acting consistent with full employment, we can be focused on stable prices. Some months ago, I said we will deliver stable prices. Today's action is consistent with that. Now, in this video clip, the reporter asks, well, who are the worst off Americans? And how are they going to deal with rising interest rates, with rising food prices, rising gasoline prices, etc? And I want you to take a look at how Warsh responds. Hi, there. Brian Chung with NBC News. Just wondering if you could explain who is the least well off, and what does a rate hike do when those people might be pinched by higher mortgage rates, higher gas, higher grocery prices, and now broad higher rates? It's a fair question. In the macroeconomics, we tend to look at aggregates around here. Aggregate GDP, overall labor market trends, the state of inflation. A lot of people in Washington spend a lot of time on distributional consequences, and that's their job and their business. What I was referring to in the least well off tend to be people that don't own financial assets. Call that a bit less than 50% of the country. They don't have equity in their home. They don't have equity in a 401k plan. So they're living off their paycheck that comes every couple of weeks. The thing that we can do consistent with our mandate is two things. Ask ourselves, is the country running more or less at full employment? And we've done that. That doesn't mean that individuals aren't searching for a job, but in aggregate, we're running more or less at full employment. If so, we can then look at the other side of our mandate and let that be our focus. In stable prices, an environment where inflation is running consistent with our 2% objective offers good news because that way when they get their wages, they can put their head above water and deliver real take-home pay increases. We don't have total responsibility for it, but we do have responsibility for stable prices. As I've said before, inflation is a choice. And today we took a step in delivering it. Now, as some of you may know, the bond markets is in trouble. Interest rates, the yields have been shooting up. And the question is, why is this happening? And Warsh gives his answer. He says three primary reasons. The first reason is a strengthened economy. This is according to him, the AI build outs, and also because of geopolitics. So please take a look. Thank you, Mr. Chairman. Neil Irwin with Axios. Longer-term bond yields are up quite a bit over the last few months, especially the last few weeks. What do you believe the bond market is telling you, especially about the growth outlook, the neutral rate, and what are the implications for monetary policy? Let me speak to the history. What bond market prices do prospectively, I want to let them tell me any story they wish to. I want to try to interrogate that. But why did yields rise, let's say, since the last FOMC meeting till this? I'll give you three reasons, but I would say these things tend to be overdetermined. This is a complicated set of things that are affecting the most important asset anywhere in the world, the 10-year treasury. It's the risk-free asset upon which every price of virtually every asset in the world is related to. So I'll say three things. First is economic strength. I think part of the reason why we've seen over the course of 2026 long-term yields go up is the economy is strengthened. Second reason, competition for capital. The surge in capital expenditures, which I referenced in my remarks, is real. And the so-called hyperscalers are out in the market raising funding. And so the competition for capital is real. And I think it partly explains the increase in yields. Okay, so that's a wrap for the Federal Reserve's press conference. I wish you a happy Friday. Thank you for the support, and I wish you a very nice day. Take care.