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Powell Says Inflation Has Eased, Labor Market Is Solid

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Bloomberg Nov 7 19:44 · 25.7k Views

Federal Reserve Chair Jerome Powell says inflation has eased and economic activity “has continued to expand at a solid pace." He speaks in Washington after officials voted unanimously to lower the benchmark lending rate by a quarter percentage point.

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Transcript

  • 00:00 My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people.
  • 00:09 The economy is strong overall and has made significant progress toward our goals over the past two years.
  • 00:16 The labor market has cooled from its formerly overheated state and remains solid.
  • 00:22 Inflation has eased substantially from a peak of 7% to 2.1% as of September.
  • 00:29 We are committed to maintaining our economy's strength
  • 00:32 by supporting maximum employment
  • 00:34 and returning inflation to our 2% goal.
  • 00:38 Today, the FOMC decided to take another step in reducing the degree of policy restraint
  • 00:44 by lowering our policy interest rate by 1/4 percentage point.
  • 00:50 We continue to be confident that with an appropriate recalibration of our policy stance,
  • 00:55 strength in the economy and the labor market can be maintained.
  • 00:58 With inflation moving sustainably down to 2%,
  • 01:02 we also decided to continue to reduce our securities holdings.
  • 01:06 I'll have more to say about monetary policy after briefly reviewing economic developments.
  • 01:14 Recent indicators suggest that economic activity has continued to expand at a solid pace.
  • 01:20 GDP rose at an annual rate of 2.8% in the third quarter,
  • 01:25 about the same pace as in the second quarter.
  • 01:29 Growth of consumer spending has remained resilient,
  • 01:32 and investment in equipment and intangibles has strengthened.
  • 01:36 In contrast, activity in the housing sector has been weak.
  • 01:40 Overall, improving supply conditions have supported the strong performance of the US economy over the past year.
  • 01:48 In the labor market, conditions remain solid.
  • 01:51 Payroll job gains have slowed from earlier in the year, averaging
  • 01:55 104,000 per month over the past three months.
  • 01:59 This figure would have been somewhat higher were not for the effects of Labor strikes and hurricanes unemployment in October.
  • 02:07 Regarding the Hurricanes,
  • 02:08 let me extend our sympathies to
  • 02:11 all the families, businesses and communities
  • 02:13 who have been harmed by these devastating storms.
  • 02:18 The unemployment rate is notably higher than it was a year ago, but it has edged down over the past three months and remains low at 4.1% in October.
  • 02:28 Nominal wage growth has eased over the past year, and the jobs to workers gap has narrowed.
  • 02:34 Overall, a broad set of indicators suggest that conditions in the labor market are now less tight than just before the pandemic in 2019.
  • 02:44 The labor market is not a source of significant inflationary pressures.
  • 02:50 Inflation has eased significantly over the past two years.
  • 02:53 Total
  • 02:54 PCE prices rose 2.1% over the 12 months ending in September.
  • 02:59 Excluding the volatile food and energy categories,
  • 03:03 core PCE prices rose 2.7%.
  • 03:07 Overall, inflation has moved much closer to our 2% longer run goal,
  • 03:12 but core inflation remains somewhat elevated.
  • 03:16 Longer term inflation expectations appear to remain well anchored
  • 03:20 as reflected in a broad range of surveys of households, businesses and forecasters,
  • 03:24 as well as measures from financial markets.
  • 03:29 Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
  • 03:37 We see the risks to achieving our employment and inflation goals as being roughly in balance,
  • 03:42 and we're attentive to the risks to both sides of our mandate.
  • 03:47 At today's meeting, the committee decided to lower the target range for the federal funds rate by 1/4 percentage point
  • 03:52 to 4 1/2% to 4 3/4 percent.
  • 03:56 This further recalibration of our policy stance
  • 04:00 will help maintain the strength of the economy
  • 04:02 and the labor market and will continue to enable further progress on inflation as we move toward a more neutral stance over time.
  • 04:11 We know that reducing policy strength to restraint too quickly could hinder progress on inflation.
  • 04:17 At the same time, reducing policy restraint too slowly could unduly weaken economic activity and employment.
  • 04:24 And considering additional adjustments to the target range for the federal funds rate.
  • 04:28 The committee will carefully assess incoming data, the evolving outlook and the balance of risks.
  • 04:34 We are not on any preset course.
  • 04:36 We will continue to make our decisions, meeting by meeting.
  • 04:41 As the economy evolves, monetary policy will adjust in order to best promote our maximum employment and price stability goals.
  • 04:49 If the economy remains strong and inflation is not sustainably moving toward 2%,
  • 04:54 we can dial back policy restraint more slowly
  • 04:58 if the labor market were to weaken.
  • 04:59 Unexpected.
  • 05:00 Goodly, where inflation were to fall more quickly than anticipated,
  • 05:03 we can move more quickly.
  • 05:05 Policy is well positioned to deal with the risks and uncertainties that we face.
  • 05:10 In pursuing both sides of our dual mandate.
  • 05:14 the Fed has been assigned two goals for monetary policy,
  • 05:17 maximum employment and stable prices.
  • 05:20 We remain committed to supporting maximum employment,
  • 05:23 bringing inflation sustainably to our 2% goal,
  • 05:26 and keeping longer term inflation expectations well anchored.
  • 05:30 Our success in delivering on these goals matters to all Americans.
  • 05:35 We understand
  • 05:36 that our affect actions affect communities, families and businesses across the country.
  • 05:41 Everything we do is in service to our public mission.
  • 05:45 We at the Fed will do everything we can to achieve our maximum employment and price stability goals.