MNI BRIEF: Powell-Not Yet Confident Policy Restrictive Enough

The Federal Reserve is not yet confident that monetary policy is sufficiently restrictive to bring inflation back to 2%, and officials are closely watching stronger economic data that could warrant further tightening but also monitoring financial conditions that have become more stringent, Fed Chair Jerome Powell said Wednesday.

"We're not confident at this time that we've reached such a stance," Powell said in his post-meeting press conference. "We are attentive to the increase in longer-term yields which have contributed to a tightening of broader financial conditions since the summer. Persistent changes in broader financial conditions can have implications for the path of monetary policy," Powell told reporters asking him about a jump in long-term bond yields to their highest since 2007.

"Evidence of growth persistently above potential, or the tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy." (See MNI: Yield Spike Cuts Chances Of Fed Dec Hike, Q1 Still In Play)