Chair Powell Asked About Forecasts, Restrictive Policy

Q: Now that the Committee is forecasting 3.8% next year, and market pricing 4%, is that sufficiently high enough? How much is restrictive, how much of that is a normal rate?

• A: How high does the rate need to go? FOMC estimates are 3.5-4%. Longer run rate is in the mid-2s. Look at impact on economy, financial conditions, etc. For much of curve, real rates are positive. That's not true for the short end. We move the policy rate, that affects conditions. Ultimately we'd like to see moderating demand, which is very hot still in the economy. Like to see labor market getting better balanced. There is a role for us in moderating demand.
• 3.8-4% in the range of plausible numbers (ref to the question). We'll know when we get there; we're not going to be model driven.