#Powell speech today code

The FedвЂ™s measures, however, will do nothing to bring down the price hikes in oil, gas, food commodities or metals which are now surging, not least because of the activities of speculators who have piled into these markets. Wage increases had to be consistent with the long-term inflation goal of 2 percent and policy makers were вЂњvery focused on restoring price stability.вЂќ Powell said the Fed was in favour of a вЂњstrong labour marketвЂќ but made clear the key issue was price stability. This is to make up for the cuts in living standards that have already taken place and the further slashing of real wages in the immediate future.

#Powell speech today code

The reference to вЂњlonger-term expectationsвЂќ of higher inflation is a code phrase for the major fear of the Fed and other central banks that workers will push for higher wages. The risk was that an вЂњextended period of high inflation could push longer-term expectations uncomfortably higher,вЂќ which underscored the need for the Fed to вЂњmove expeditiously.вЂќ Under conditions where the latest burst of inflation comes from the flow on effects of the war in the Ukraine, the Fed would not вЂњlook through a brief burst of inflation associated with commodity price shocksвЂќ but would act. вЂњBy many measures, the labour market is extremely tight, significantly tighter than the very strong job market before the pandemic,вЂќ he said in his prepared remarks to the NABE conference. The Wall Street Journal noted that PowellвЂ™s remarks struck a вЂњtougher toneвЂќ than he had used at his press conference just days earlier when the Fed announced a 0.25 percentage point rise. вЂњIf we think itвЂ™s appropriate to raise by 50 basis points at a meeting or meetings, we will do so,вЂќ he said. In the question-and-answer session, he was asked what would prevent the Fed lifting its base interest rate by 0.5 percentage points (50 basis points) at its next meeting in May.

Powell began his remarks to the NABE conference by emphasising that the вЂњlabour market is very strong, and inflation is much too high.вЂќ It was necessary to return monetary policy to a more neutral level вЂњand then to move to more restrictive levels if that is what is required to restore price stability.вЂќ The example of former Fed chair Paul Volcker in the 1980s, who pushed interest rates to a record high, creating a deep recession and driving down wage demands amid rampant inflation, was one to be followed. In remarks to a Senate committee earlier this month, Powell left no doubt about what he was prepared to do if necessary. In other words, while workers are having their real wages cut, daily in some cases as prices climb, the FedвЂ™s stated policy is to deepen this process by reducing the demand for labour through its monetary policy.

Federal Reserve Board chairman Jerome Powell testifies before Congress on Tuesday, June 22, 2021.