Comments from Jerome Powell at the 2022 Jackson Hole symposium.
July lower inflation numbers are welcome but short of what’s needed by the Fed before confident in inflation moving down
Fed is moving policy ‘purposefully’ to a level sufficiently restrictive to return inflation to 2%
With inflation running far above 2 percent and the labor market extremely tight, estimates of longer-run neutral are not a place to stop or pause
Restoring price stability will take some time, require using central bank’s tools ‘forcefully’
Reducing inflation likely to require sustained period of below-trend growth
There will very likely be some softening of labor condition and some pain to households
There are unfortunate costs of reducing inflation but failing to restore price stability
The historical record cautions strongly against prematurely loosening policy
The longer high inflation continues, the greater the chance it will become entrenched
Estimates of longer-run neutral are not a place to stop or pause.