Powell: The impact of the Federal Reserve on the economy depends on whether the public can understand what the Fed is saying.

Federal Reserve Chairman Powell emphasized the importance of education in a recent event, stating that public understanding is key to the Fed's impact on the economy.

During an online dialogue with school teachers and economic educators on Thursday, September 28th, Powell said that the Fed's ability to influence the economy depends on "people understanding what we're saying."

He further mentioned that when Fed officials announce interest rates and economic expectations, "one of our goals is to influence spending and investment decisions in the current and coming months. This can only happen when people understand what we're saying and what it means for their own finances."

Powell stated that economic educators are also guiding monetary policy through their teaching, as the knowledge they impart helps the Fed promote economic health.

Powell did not comment on his views on interest rates and the outlook for the US economy on Thursday. Just a week before his speech, the Fed announced its latest interest rate decision and rate path expectations. The general consensus is that the Fed signaled a willingness to maintain higher interest rates for a longer period.

The Fed's monetary policy meeting concluded last Wednesday with no change in interest rates. However, the updated dot plot released by Fed officials after the meeting signaled a hawkish stance, with over 60% of officials expecting another rate hike this year. Additionally, the median projection for interest rates in the next two years was raised by 50 basis points compared to the previous projection. This suggests that the Fed expects the number of rate cuts next year to be halved to two.

The updated economic projections released after the meeting showed a more optimistic outlook for the economy. Fed officials raised their GDP growth forecast for this year to 2.1%, double the previous projection, and also increased their GDP growth forecast for next year. They lowered their unemployment rate projections for this year, next year, and the following year, slightly raised their PCE inflation expectations for this year and next year, and lowered their core PCE inflation expectations for this year.

During the press conference after the meeting last Wednesday, Powell stated that the Fed is very close to its interest rate target. The decision to hold rates steady this time does not mean that the Fed has reached its desired restrictive stance. Most policymakers believe that further rate hikes may be appropriate this year. The Fed is prepared to raise rates again when conditions are appropriate and intends to maintain restrictive rates until there is confidence that inflation is sustainably moving towards the Fed's target.

Powell mentioned at the time that economic activity is strengthening, indicating the need for more rate actions. However, the full effects of this tightening cycle have not yet been felt, and decisions will be made based on the latest data, proceeding cautiously with the rate path. He emphasized that a soft landing is the Fed's primary goal, but the Fed does not view a soft landing as the baseline expectation. The Fed tends to overlook short-term fluctuations in energy prices. Afterwards, journalist Nick Timiraos, who is regarded as the "voice of the Federal Reserve" and is known as the "new Federal Reserve news agency," commented that the Federal Reserve will raise interest rates again this year. In his article, he stated that although there are some differences among Federal Reserve officials, most of them are inclined to raise interest rates again this year. The stronger economic growth has led officials to predict that interest rates will remain at a higher level for a longer period of time next year.

Two days after the Federal Reserve meeting, several Federal Reserve officials made speeches last Friday, conveying a general message that interest rates will remain at a higher level for a longer period of time, and the possibility of further rate hikes cannot be easily ruled out. Among them, Federal Reserve Governor Bowman, who has always had voting rights in the Federal Open Market Committee (FOMC) meetings, even hinted that there may be more than one rate hike.

However, recently, some Federal Reserve officials have made dovish comments due to the threat of a government shutdown in the United States.

On Wednesday, Minneapolis Fed President Kashkari, who has voting rights in this year's FOMC meetings, stated that a government shutdown or a strike in the auto industry could drag down the US economy, and the Federal Reserve may therefore reduce its actions.

Earlier on Thursday, Chicago Fed President Evans, who has voting rights in this year's FOMC meetings, stated that the risk facing the Federal Reserve is that it may have set policies based on its previous experience of combating high inflation, and it may have placed too much emphasis on the need for significant unemployment to quell inflation, which could lead to excessive rate hikes.

On the same day, Richmond Fed President Barkin, who will have voting rights in next year's FOMC meetings, stated that it is too early to judge whether another rate hike is needed. He also said that even if the United States enters a recession, it should be able to avoid a severe downturn.

As mentioned by Wall Street News, if the federal government shuts down starting from October 1st, economic data including the non-farm payroll report may be delayed. Without the data and with the uncertain economic situation, it would be best for the Federal Reserve to maintain the status quo.