MNI TRANSCRIPT: Powell on Employment Mandate

     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: Chair Powell, the fed policy review this year has been largely discussed

in terms of the inflation side of the mandate and the need to sharpen inflation

expectations. But it seems like the message you have been getting from the fed

events and something you acknowledged that the fed has been systematically

overestimating labor utilization throughout this expansion, so I'm wondering if

you can talk about the extent to which the review is looking at the employment

side of the mandate as well. Are there any possibilities for perhaps

systematizing a more asymmetric reaction function with regard to unemployment?

Thank you.

     A: The focus is on how to use our strategies, tools and communications to

achieve both sides of the mandate. You are right though that we talked here a

lot about inflation. I think that more broadly, over a period of years, many

years, we have been learning that the natural rate of unemployment is lower. It

is in estimates, not just at the fed but broadly among labor economists, have

seen that the connection, that we can sustain much lower levels of unemployment

than had been thought. As I mentioned that is a good thing, because that means

we don't have to worry so much about inflation. You see the benefits of that in

today's labor market. The fed listens event are about inflation to a much lesser

extent than they are about maximum employment, if you listen to or attended any

of those. The discussion, we always focus on inflation as well but the

discussion is really around what is happening in low and moderate income

communities, and amongst small businesses, and I think you get a perspective

which we were already getting that from our extensive outreach to community

groups and such, but it was helpful to get it in the context of a monetary

policy review. I think the fact that these communities have so much, such high

levels of unemployment and low levels of labor force participation tells you

that there is slack out there. I think that does also inform our understanding

of what we mean by maximum employment. It's been a very positive, I would say

that the fed listens events have been extraordinarily positive and they are

something we will repeat. You see from the business perspective that companies

are taking all kinds of measures to look through things on people's resume' that

would have perhaps disqualified them in other kinds of environments, training is

moving up. You hear, there are a lot of things going on that suggest that people

at the margins of the labor force are being pulled in and being given chances,

which is a great thing.

     Q: is there any way to systematize these insights, do you think, in terms

of we talk a lot about for example make up strategies on the inflation side. Is

there anything similar you could do on the employment side?

     A: You know, I think we have kind of internalized, and this isn't news for

today, this is something we have been saying for several years, you have seen us

moving down our estimates of maximum employment, in facts it's already

understood I think that there is more, even though we are at 3 and a half

percent unemployment, there is actually more slack out there in a sense. And the

risks of using accommodative monetary policy, our tool, to explore that, are

relatively low. I think we know that, and I think the reviews certainly

underscores that. But that is a very important insight.

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

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