MNI TRANSCRIPT: Powell on Appropriate Policy and Inflation

     WASHINGTON (MNI) - The following is the portion of a transcript from

Federal Reserve Chairman Jerome Powell's press conference after the FOMC meeting

Wednesday:

     Q: I'm curious about your inflation forecasts, which are pretty low cost

forecast horizon. I guess given how low you think inflation will be the coming

year, why is policy appropriate now and why not throw everything at the kitchen

sink at it currently? Can you talk about what urgency you see in returning it

back to that 2% target? 

     A: The current policy stance is appropriate. Remember, we're using our

emergency lending tools to an unprecedented extent. We have asset purchases and

won't go lower than this. We're prepared to adjust as appropriate, and rates are

at effective lower balances. So we have all of our tools in use in a strong way.

What we're waiting for is to learn more. I think, actually, if you look at the

May employment report, it's a good -- probably the biggest data surprise that

anybody can remember. It's a pretty good illustration of just how uncertain

these times are. The economy is re-opening and we learn a lot about the path of

the economy in the next incoming months. That's really what we're looking for.

In terms of inflation, you'll know that we had 128-month expansion, and we never

did quite get inflation back to 2% on a symmetric sustained basis. We were close

for the last couple of years, but we never got there. I think we have to be

humble about our ability to move inflation up and particularly when unemployment

is going to be above most estimates of the natural rate -- certainly above the

median in our SEP well through the end of -- past the end of 2022. So I do think

we're in the right place now. We are looking carefully at what the -- as we

learn more and better understand the path of the economy, we will be assessing

what's the best way to deploy all of our tools to achieve our goals in the best

possible way. I'll say again that we are -- the May employment report was a

welcome surprise and very pleased and hope to get more like it. It's a long run.

It's well more than 20 million people displaced in the labor market. It will

take some time, and we're going to be deploying all of our tools to their full

extent in pursuit of that -- of those goals however long it takes.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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