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We’re not seeing evidence in labor markets of very substantial upward pressures on labor that could signify extreme shortages of labor that could propel inflation higher in a very rapid way, and inflation is still operating below our objective. | 2,022 | 0 |
In addition, the median estimate of the longer-run normal unemployment rate moved down a tenth to 4.6 percent. | 2,022 | 1 |
But, really, it isn’t monetary policy. | 2,022 | 2 |
Finally, I would like to note that the Committee strives to explain its monetary policy decisions as clearly as possible, and we continue to explore ways of enhancing the clarity of our public communications. | 2,021 | 2 |
Now, we have—you know, we haven’t anticipated that slowdown in productivity, and that’s one of the main reasons why we haven’t anticipated the relatively slow growth. | 2,021 | 0 |
And inflation is well above target. | 2,020 | 1 |
So the—the sooner we get the virus under control, the sooner people can regain that confidence and regain their economic activity. | 2,021 | 2 |
So for many, many years, we’ve been far from maximum employment and stable prices, and so the need for accommodative policy has been—has been clear. | 2,016 | 0 |
And, and some of the answer to that may be price. | 2,015 | 2 |
But my colleagues and I continue to believe that the factors that are responsible this year for holding inflation down are likely to prove transitory. | 2,020 | 2 |
So, there has been impact through lower interest rates, but I think more broadly is the indirect effects. | 2,014 | 0 |
So I think, through all of those channels, monetary policy works. | 2,020 | 2 |
Well, we—as a Committee, we do not desire inflation undershoots. | 2,020 | 0 |
If we think that the potential growth rate of the economy is somewhere between, somewhere around 1.75 percent, 2.8 percent is strong economic growth. | 2,021 | 0 |
And that is a statement about productivity growth, which has been pretty disappointing. | 2,020 | 1 |
But I do think that—and I do think also that unemployment insurance benefits will run out in September, so to the extent that’s a factor, which is not clear, it will no longer be a factor fairly soon. | 2,011 | 2 |
The Committee will continue to pay close attention to the evolution of inflation and inflation expectations. | 2,016 | 2 |
Again, that’s not a forecast, I’ve made a hypothesis, which would imply slower improvement in unemployment. | 2,019 | 0 |
The “extended period” language is conditioned on exactly those same points: “Extended period” is conditioned on resource slack, on subdued inflation, and on stable inflation expectations. | 2,015 | 0 |
Moreover, in light of the anticipated modest pace of economic recovery, the Committee expects that over coming quarters the unemployment rate will decline only gradually toward its mandate-consistent levels. | 2,014 | 0 |
And if we do that, inflation expectations will be right at 2 percent, and that’ll help us achieve 2 percent inflation over time and avoid the situation where the central bank loses its ability to support the economy. | 2,013 | 2 |
That means that we can run at low levels of unemployment and have a historically good—in some dimensions—labor market without having to worry about inflation. | 2,016 | 2 |
For example, we have used some of our work to look at interest rate risk and interest rate sensitivity and, you know, found generally that banks can also sustain a significant increase in long-term interest rates as well for a number of reasons, one of them being that higher interest rates increase their franchise value because it increases their net interest margin over time. | 2,021 | 2 |
And in so far as that will affect monetary policy, of course we will have to factor those policies along with many other things, including the global environment and oil prices and other matters. | 2,013 | 2 |
The U.S. economy is in a good place, and we will continue to use our monetary policy tools to help keep it there. | 2,020 | 1 |
And, as I went into detail in Jackson Hole and won’t repeat all of that there, there are other ways in which we see underutilization—high levels that have come down only very marginally of part-time employment for economic—or involuntary part-time employment, perhaps some remaining shortfall of labor force participation as a result of cyclical factors. | 2,015 | 2 |
The outbreak has also disrupted economic activity in many countries and has prompted significant movements in financial markets. | 2,021 | 2 |
But again, our basic forecast is one which is basically, as was pointed out earlier by Mr. Hilsenrath, a moderately optimistic forecast, where growth picks up as we pass through this period of fiscal restraint | 2,018 | 2 |
And productivity’s been very low. | 2,020 | 1 |
It was the year of synchronized global growth. | 2,021 | 2 |
I guess I would also urge you to remember that when you look at the projections, that there are many factors that affect those projections, and changes in tax policy—that’s only one of a number of factors, including incoming data that has, to some extent, altered the outlook for growth and inflation. | 2,019 | 2 |
Monetary policy has a role, and it really is in, you know—our original role was providing liquidity to financial systems when they’re under stress, and that’s—that’s really part of what we did today. | 2,014 | 0 |
On the other hand, by that metric, the, the September 16, 2020 unemployment rate would have been in the—in the 20s in, in April. | 2,021 | 2 |
We are hopeful that Europe will take additional measures and do all that’s necessary to stabilize the situation and to provide the basis for an ongoing stable structure that—in which banks and sovereigns are both stabilized, in which there’s a program for growth, and in which fiscal arrangements are clear—are made much clearer. | 2,020 | 2 |
I did indicate that I do have concerns about the scope for monetary policy. | 2,013 | 2 |
In terms of the, you know, inflation, a couple things—your second question. | 2,013 | 2 |
I mean certain parts of South Carolina have developed pretty strongly but the part where I come from—mostly agricultural, it has a little bit of manufacturing—has a very high unemployment rate, a high foreclosure rate, and people are having a hard time there. | 2,019 | 0 |
Inflation is also being held down, reflecting weaker demand as well as significantly lower energy prices. | 2,012 | 0 |
Well, that’s—what’s happening there is the fact that the relationship between resource utilization, or unemployment, and inflation has just gotten weaker and weaker over the years. | 2,020 | 0 |
Of course, we’re ready to provide information that Congress needs to evaluate the Fed’s decisionmaking, in monetary policy and elsewhere. | 2,021 | 2 |
What we really mean is that we would look at—we know that inflation will move around on both sides of the target, and what we say is that we would be equally concerned with inflation persistently above as persistently below the target. | 2,017 | 2 |
Our tools work on demand. | 2,012 | 2 |
It was to do with, you know, strong monetary policy and fiscal stimulus into an economy that was recovering rapidly, and in which there were these supply-side barriers which effectively led to, you know, in certain parts of the economy, what you might call a vertical supply curve. | 2,021 | 1 |
So that means a more prolonged shortfall of inflation. | 2,019 | 2 |
But, first, on inflation expectations, it is true that the breakevens from the inflation-adjusted—inflation-indexed bonds have come down. | 2,022 | 0 |
So and, and, you know, the shorter-term ones do tend to move around based on, for example, gasoline prices. | 2,020 | 2 |
But it could be that if interest rates rise quickly, for example, that we would be in a situation of not giving remittances to the Treasury for a couple of years, and that would create problems, no doubt, for the Fed in terms of congressional response. | 2,018 | 2 |
The central tendency rises to 2.4 to 2.7 percent next year, somewhat above estimates of the longer-run growth rate. | 2,012 | 1 |
The problem with the current situation is that, that if you have a sustained period of supply shocks, those can actually start to undermine or to work—to work on de-anchoring inflation expectations. | 2,012 | 1 |
As always, each participant’s projections are conditioned on his or her own view of appropriate monetary policy. | 2,018 | 2 |
There should be able to be an adjustment that would have lower than—perhaps lower-than-expected increases in unemployment—lower than would be expected in the ordinary course of events because the level—the ratio of, of vacancies to unemployed is just out of keeping with historical experience. | 2,015 | 2 |
And—and we do that with measures that—that, you know, keep people in their homes; that—that support hiring; that support growth; that avoid unnecessary, avoidable business insolvencies. | 2,011 | 2 |
And the maximum level of employment that’s consistent with price stability evolves over time within a—within a business cycle and over a longer period, in part reflecting [the] evolution of the factors that affect labor supply, including those related to the pandemic. | 2,022 | 2 |
Now, members of the Committee have different views about why this is likely to be true, that the funds rate—when the labor market is normalized and inflation is back to our objective—they maybe have slightly different views on exactly why it’s likely to be the case that interest rates will be a little lower than they would in the longer run. | 2,014 | 0 |
We're looking at wages and we're looking at ultimately inflation. | 2,019 | 2 |
The Federal Reserve’s response is guided by our mandate to promote maximum employment and stable prices for the American people, along with our responsibilities to promote the stability of the financial system. | 2,020 | 1 |
The Federal Reserve’s enhanced guidance about its policy intentions and its substantial and still-increasing holdings of longer-term securities will ensure that monetary policy remains highly accommodative, consistent with the pursuit of its mandated objectives of maximum employment and price stability. | 2,020 | 0 |
But it’s not easy to get a clear read on the implications of asset prices for the overall outlook. | 2,020 | 2 |
I think we all agree that the economy is making progress, that we are close to an unemployment rate that is one that’s sustainable in the longer run. | 2,015 | 1 |
As far as—as the policy rate, what we’ve said is that we will maintain the rate at this level until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals. | 2,017 | 2 |
Again, while I do not shirk the responsibility of the Fed having to do what it can to meet its mandate, obviously, a broad range of policies can affect growth and employment, and I hope that there will be a range of actions that will complement and supplement the Federal Reserve’s efforts. | 2,019 | 2 |
Our role, though, is also to, you know, to make sure that—that maximum employment happens in a context of price stability and financial stability, which is why we’re gradually raising rates. | 2,021 | 1 |
I mean, we—the—again, the relationship between slack in the economy and inflation is weak, has been weak. | 2,015 | 2 |
It was a question of not getting inflation up to our target on a robust, symmetric kind of a way. | 2,021 | 0 |
The Federal Reserve is fully committed to both sides of its mandate—to price stability as well as to maximum employment—and it has both the tools and the will to act at the appropriate time to avoid any emerging threat to price stability. | 2,020 | 1 |
The economy is continuing to make progress toward the FOMC’s objective of maximum sustainable employment. | 2,012 | 1 |
To the extent the global economy is weak and the United States is strong, it’ll—we’ll wind up, you know, we’ll wind up exporting some of our demand through, through imports rather than having, having a lot of exports. | 2,021 | 1 |
Well, you know, if the economy were disappointing, we—you know, our actions wouldn’t purely be based on inflation, we would also take employment into account. | 2,022 | 0 |
That’s not going to happen without, without restoring price stability. | 2,016 | 1 |
Wage growth is not—there are many factors that affect it—it’s not definitive in any sense in determining our policy, | 2,021 | 2 |
And one reason for that is that long-term interest rates generally embody two factors. | 2,011 | 2 |
However, at 7.7 percent, the unemployment rate remains elevated. | 2,013 | 0 |
That said, many of my colleagues and I would see a portion of the decline in the unemployment rate as perhaps not representing a diminution of slack in the labor market. | 2,016 | 1 |
In light of increased uncertainties and muted inflation pressures, we now emphasize that the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion with a strong labor market and inflation near its 2 percent objective. | 2,013 | 0 |
But to the extent that continues to be the case, that should make it easier to restore price stability. | 2,014 | 1 |
I think the—you know, in a way, the least tight aspect of it is, is looking at the unemployment rate, which is still below our median estimate of, of [the unemployment rate consistent with] maximum employment. | 2,015 | 0 |
That transition itself could help bring inflation down, because, presumably, people would spend a little less on goods while they start spending more on travel and all sorts of travel services and things like that. | 2,016 | 2 |
You know, we’re, we’re—inflation measures are always going to be a bit volatile. | 2,014 | 2 |
And I really don’t have much for you other than to say that they will be data dependent—that, over time, the stance of policy will be adjusted to try to keep the economy on a track where we see continuing progress toward achieving our goals of maximum employment and price stability. | 2,019 | 1 |
if you ask me, is this a significant factor shaping monetary policy now, well, it’s on the list of risks, it’s not a major—it’s not a major factor. | 2,015 | 2 |
You know, what you hear out there is that demand—you talk to banks, and they’ll say demand for loans is very, very low right now. | 2,014 | 0 |
As always, our actions are guided by our congressional mandate to promote maximum employment and price stability. | 2,018 | 1 |
These base effects will contribute about 1 percentage point to headline inflation and about 0.7 percentage point to core inflation in April and May. | 2,022 | 2 |
So it’s a double whammy coming from higher gasoline prices. | 2,016 | 1 |
In addition, the May 1, 2019 trimmed mean measures of inflation did not go down as much. | 2,022 | 1 |
The jobs picture continues to be strong, with the unemployment rate near historic lows and with stronger wage gains. | 2,021 | 1 |
And we’d like to see that in the form of a series of declining monthly inflation readings—that’s what we’re looking for. | 2,017 | 1 |
The second point that I made was that when short-term interest rates hit zero, the tools of a central bank are no longer—are not exhausted, there are still other things that the central bank can do to create additional accommodation. | 2,012 | 0 |
And it is not—it’s not exactly the same as watching global growth, where you see growth weakening, you see central banks and governments responding with fiscal policy, and you see growth strengthening, and you see a business cycle. | 2,020 | 0 |
What monetary policy affects, primarily, is the state of the business cycle, the amount of excess unemployment or the extent of recession in the economy. | 2,017 | 2 |
We, frankly, didn’t even get inflation back up to target—without seeing wages getting out of touch with—with where they should be, so that’s the—that’s the biggest thing we can do. | 2,020 | 0 |
Well, if the economy worsens and inflation remains relatively low, then we wouldn’t begin to exit, and, therefore, we wouldn’t change the language. | 2,020 | 0 |
When we reach maximum employment, when we reach a state where labor market conditions are at maximum employment in the Committee’s judgment, it’s very possible that the inflation test will already be met. | 2,017 | 0 |
We are quite aware that very low interest rates, particularly for a protracted period, do have costs for a lot of people. | 2,020 | 1 |
So we want to see that healthy process unfold as we decide what the true state of the economy is, and we think it will evolve in a way that will mean lower inflation. | 2,019 | 0 |
Returning to monetary policy, we recognize that there has been a great deal of focus on today’s policy decision. | 2,012 | 2 |
But you do see growth in services, so you—this pattern around the world of Chair Powell’s Press Conference FINAL weak manufacturing | 2,014 | 2 |
This was before inflation really was under control, but, you know, it’s very interesting to look at the history. | 2,022 | 2 |
And the way I would explain it is, is that inflation that’s too low will mean that interest rates are lower. | 2,022 | 0 |
I’m just saying, that, that is what fiscal policy can do that, really, monetary policy can’t do—is, is invest in the future productive capacity of the economy, raise potential growth. | 2,020 | 2 |
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