Powell Defends Fed's Inflation Language

Q: What level is maximum employment, when you say re inflation on track to moderately exceed, how should we define moderately and how should we define for some time?

A: "Maximum employment is not something that can be reduced to a number the way inflation can", a broad range of factors: low unemployment, high labor force, wages. "We're not looking at a rule, we're looking at a judgmental assessment which I think we'll be very transparent about as we go forward"

On inflation language: "the idea that we would look for the quickest way out is just not who we are, there's no message of that here. We would not be looking for one month of 2% inflation. We said, return to achieve 2% inflation so just to understand that we're strongly committed to achieving our goals and overshoot so that should tell you about that.

In terms of what moderate means? It means not large. It means not very high above 2%. It means moderate. I think that's a fairly well understood word. In terms of "for a time", what it means is not permanently and not for a sustained period.

We're resisting the urge to try to create some sort of a rule or a formula here and I think the public will understand pretty well what we want. It's actually pretty straightforward. We want to achieve inflation that averages 2% over time. And if we do that, inflation expectations will be right at 2% and that will help us achieve 2 % inflation over time and avoid the situation where the central bank loses its ability to support the economy."