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MNI: Powell Not Yet Confident Fed Sufficiently Restrictive

  • The Federal Reserve will not hesitate to tighten monetary policy further if recent progress on inflation turns out to be a "head fake" or if stronger growth prevents further balancing in the labor market and undermines inflation progress, Fed Chair Jerome Powell said Thursday.
  • The Fed expects GDP growth to moderate in coming quarters, but "that remains to be seen," he said in prepared remarks. "We are attentive to the risk that stronger growth could undermine further progress in restoring balance to the labor market and in bringing inflation down, which could warrant a response from monetary policy."
  • The Fed "is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time; we are not confident that we have achieved such a stance," Powell said. The Fed will "move carefully" so that the central bank can address the risk of being misled by a few good months of data, and the risk of overtightening, he said.

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