Powell Says Fed Doesn't Have Preset Policy Path, Impact of Hikes Uncertain

The FOMC initially kept interest rates near zero to support economic recovery. As the economy improved, rates were gradually increased to more normal levels. The FOMC forecasts solid growth, low unemployment, and stable inflation but acknowledges the uncertainty of forecasts. Policymaking involves balancing risks of moving rates too fast or too slow. The FOMC remains flexible, adjusting policies based on incoming data to maintain economic stability.

Why did the FOMC initially keep interest rates near zero?

• To reduce government debt

• To encourage inflation

• To support economic recovery

• To increase unemployment

What is the FOMC's current forecast for the economy?

• Deflation and high unemployment

• Economic recession

• Solid growth, low unemployment, and stable inflation

• High inflation and high unemployment

What does a neutral interest rate mean for the economy?

• It neither speeds up nor slows down growth

• It causes inflation to rise

• It slows down economic growth

• It speeds up economic growth

What risk does the FOMC face if they increase rates too quickly?

• Shortening the economic expansion

• Increasing government debt

• Causing deflation

• Raising unemployment

How does the FOMC plan to adjust its monetary policy?

• By responding to changing economic and financial data

• By following a preset policy path

• By maintaining constant interest rates

• By ignoring economic data