Chair Powell On The Balance of Risks In Relation To The Terminal Rate

More on the balance of risks re the terminal rate:

• It is very difficult to manage the risk of doing too little, and finding out in six or 12 months that we actually were close but didn't get the job done, inflation springs back and we have to go back in, and now you really do worry about expectations getting unanchored and that kind of thing. This is a very difficult risk to manage.
• We have no incentive or desire to over-tighten, but if we feel we have gone too far, inflation is coming down faster than we expect, we have tools that would work on that.
• So, do I think in this situation where we still have the highest inflation in 40 years ... the job is not fully done. We have a sector that represents 56% of the core inflation index where we don't see disinflation yet. We don't see it, it is not happening yet.
• Inflation in core services, X-housing is still running at 4% on a 6 and 12-month basis, so there is nothing happening there. In the other two sectors representing less than 50%, I think you now have a story that is credible, coming together, although you don't yet see disinflation in housing services, but it is in the pipeline. So, for the third sector we don't see anything.
• So, I think it would be very premature to declare victory or think we really got this. We need to see -- our goal, of course, is to bring inflation down.