Powell Asked On Maximum Employment Via Inflation

Q: Are you saying you know you're at maximum employment via inflation? Are those signals clear right now given inflation is caused by supply chain disruptions?

• A: The inflation that we got "was not at all the inflation we were looking for or talking about in the framework. It really was a completely different thing." Says that it's been to do with strong monetary policy and fiscal stimulus amid a rapid recovery, and also supply side barriers.
• Re max employment, "how do you know? I think you look at prices and quantities". "A number of things": labor force participation, unemployment rate, groups of participation, JOLTS and wages "one of the great signals, the quits rate one of the very best indicators".
• "I expect over time that the level of maximum employment that's consistent with price stability would increase further over time for example through increasing participation.
• So we would not in any way want to foreclose the idea that the labor market can get even better, but again, with inflation as high as it is we have to make policy in real time. We have to make that assessment in real time."