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Chair Powell On Unemployment Projections

FED

Q: The new SEP shows unemployment ticking up, is that necessary to combat inflation?

  • A: You're right, unemployment median goes up to 4.1%. I would characterize that as if you get inflation on its way down to 2% and unemployment goes up to 4.1% that's still a historically low level. Haven't seen unemployment below 4% but one year in the last 50; going up to that rate with inflation going toward 2% would be a successful outcome.
  • We don't seek to put people out of work. But you can't have the labor market we want without price stability and we have to establish price stability. We want to get back to the labor market we had before the pandemic. But to get there, it's not going to happen with the levels of inflation we have.
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Q: The new SEP shows unemployment ticking up, is that necessary to combat inflation?

  • A: You're right, unemployment median goes up to 4.1%. I would characterize that as if you get inflation on its way down to 2% and unemployment goes up to 4.1% that's still a historically low level. Haven't seen unemployment below 4% but one year in the last 50; going up to that rate with inflation going toward 2% would be a successful outcome.
  • We don't seek to put people out of work. But you can't have the labor market we want without price stability and we have to establish price stability. We want to get back to the labor market we had before the pandemic. But to get there, it's not going to happen with the levels of inflation we have.