Federal Reserve System Chairman Jerome Powell on Thursday speaking at the Cato Institute reiterated his commitment to inflation as expressed at the Jackson Hole symposium. His speech came after ECB had just raised rates by 75bps, earlier in the week the RBA with 50bps and Bank of Canada also raised by 75bps. Powell took a decidedly hawkish tone at Jackson Hole which sent US stock markets sharply lower. The chairman sent stock futures lower when he reminded his to intention “to keep going until we get the job done on inflation”
Fed Chair Powell has gradually worked in a hawkish persona, amplifying it at Jackson Hole. We have a come quite aways since he said it’s a good time to retire the word “transitory” and suggested its appropriate to taper more quickly. That moment answering questions in testimony at the joint Senate hearing with Treasury Secretary Janet Yellen before Senate Banking on Coronavirus and the CARES Act.
I refer back to that moment given the political imposition on the Fed we have had in the U.S. and the mess walking that rope has left us. The Fed Chair moved his bias toward the hawkish side which surprised many with the new Covid19 variant Omicron causing global concern at the time. He said it was time to retire “inflation is transitory” and said it is time for a faster taper to be discussed.
With massive U.S. debt and deficits, inflation at a 40‐year high, and popular/political pressure for expanding the Fed’s mandate, it’s time to assess the Fed’s performance and future. Please join leading scholars and policymakers to discuss “The State of Monetary Policy after 40 Years.”
9:10 – 9:50 AM A Conversation with Jerome Powell
Jerome Powell, Chair, Federal Reserve Board
Moderated by Peter H. Goettler, President and CEO, Cato Institute
Highlights from Powell at Cato Institute Sept 8, 2022
Inflation
- We need to keep going until we get the job done on inflation
- Very much my view we need to act forthrightly, strongly on inflation
- My message is the Fed has and accepts responsibility for price stability
- Longer inflation remains above target, greater the risks
- History cautions against prematurely loosening policy
- We are strongly committed to bring inflation down
- We will not be influenced by political considerations
- The Fed focuses on its mandate
- Publics expectations on inflation play an important role
- Very important that inflation expectations remain anchored, today they are well anchored over longer term and the short and the clock is ticking
- A more concerned public will incorporate higher inflation expectations
- We are committed to doing the job of making sure inflation expectations are anchored
- We hope to achieve a period of below trend growth
Employment
- Labor is still very, very strong
- Wages are running at elevated levels
- We think our policy moves will be able to put growth below trend and get labor market back into balance
- In the last labor market report, we saw welcome increase in labor force participation rate
- Do not see the case for moving to a single mandate on inflation vs. maximum employment AND inflation
- We can achieve both goals in medium-term
- I would not want to see current mandate narrowed or broadened
- We have a precious grant of independence which allows us to pursue our goals without intervention
- Our current operation framework on balance sheet is a good one. No need to return to scarce reserves
Digital Currencies
- No decision made on central bank digital currency’s
- Digital currencies are speculative asset. It is not really a store value
Source: Cato, TC
From The TradersCommunity News Desk